Both material sourcing and inventory management are important competitiveness factors, and it is a significant challenge to integrate the two areas. In sourcing, combined strategies using long-term contracts and the spot market received increasing attention recently, typically concentrating on...

Leading companies in several industries purchase materials with the combined use of capacity reservation contracts and spot market. We analyse the optimal and a simplified policy for making long-term capacity reservation and periodic ordering/inventory decisions using the above two sources under...