earticle

영어

Marginal analysis has been adopted widely by managers in the field or instructors teaching management science/operations management-related courses as a useful approach for solving the problem of determining the optimal production or order quantity under a specific probabilistic distribution of demand. Based on the marginal relationship between prices, Simchi-Levi et al. (2008) have proposed a simple rule for establishing the relationship between optimal production quantity and average demand by evaluating the marginal profit and the marginal cost of producing an additional unit in supply chain. Their rule has been adopted as a useful model for illustrative purpose in management science/operations management-related courses. However, Simchi-Levi et al. rule based on the marginal relationship alone between prices is not always the case and, therefore, may mislead managers and students to wrong decision. With some counter examples and mathematical justification, this study addresses the risk relying on marginal analysis in determining the range of optimal production or order quantity of manufacturer or distributor in supply chain.