Integrated design and operation of remnant inventory supply chains under uncertainty

We consider the simultaneous design and operation of remnant inventory supply chains. Remnant inventory is generated when demand for various lengths of a product may be satisfied by existing inventory, or by cutting a large piece into smaller pieces. We formulate our problem as a two-stage stochastic mixed-integer program. In solving our stochastic program, we enhance the standard L-shaped method in two ways. Our computational experiments demonstrate that these enhancements are effective, dramatically reducing the solution time for large instances.

► We consider the simultaneous design and operation of a remnant inventory supply chain.
► The problem is formulated as a two-stage stochastic program.
► Enhancements to the L-shaped method are developed.
► Computational results are provided.