Internal Supply Chain Coordination in the Electric Utility Industry

• Main Authors: FORGIONNE, Guiseppi, GUO, Zhiling
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2009
• Subjects: Optimal control; Electric utilities; Supply chain management; Econometrics; Computer Sciences; Operations Research, Systems Engineering and Industrial Engineering
• Online Access: https://ink.library.smu.edu.sg/sis_research/1861; https://doi.org/10.1016/j.ejor.2008.03.041
• Institution: Singapore Management University

Electric utilities have a well-established vertical internal and external supply chain. Theoretically, information sharing, involving production, inventory, and other policy variables, between chain entities can improve supply chain performance. Such sharing relies on a systematic determination of the optimal policy variables for the chain. This paper presents an analysis of the electric utility’s decision problem based on an optimal control model in a competitive market environment. Optimal production and inventory policies are developed for a centralized supply chain under full information sharing. The model and policies are tested with electric utility industry data, and performance implications are discussed for electric utility managers and public regulators.