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Supply Chain Management and its Applications in Computer Science by Sihem Ben Jouida, Saoussen Krichen

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3The Ordering Problem

3.1. Introduction

Ordering refers to the forecasting of products, either for internal use or for distribution, to meet external end-customers needs. The ordering process consists of the following questions: what type of product will be ordered, how much is needed, and when and where will the products be needed. It also determines where and when to source products and how much inventory to carry. The management of the ordering function requires respecting of the logistic network and supply chain constraints, such as warehouse capacity, transport options and lead times. Many extensions to the ordering problem have been explored and differ by the number of levels in the supply chain and the number of actors at each level. Table 3.1 splits the ordering problem in terms of two main components, namely the number of suppliers (one or multiple) and the number of retailers (one or multiple). Hence, we address four problem types. For each type, the problem inputs are displayed and adapted in the following way:

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Table 3.1. Alternative ordering problems with respect to the supply chain taxonomy

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3.2. Terminology

The following symbols designate the shortcuts used for the ordering problem:

EOQ The economic order quantity
TC The total cost
PC The purchasing cost ...

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