Department of Industrial Engineering2024-11-1020130360-835210.1016/j.cie.2012.12.0122-s2.0-84876160021http://dx.doi.org/10.1016/j.cie.2012.12.012https://hdl.handle.net/20.500.14288/16651In this study, we consider the coordination of transportation and production policies between a single supplier and a single retailer in a stochastic environment. The supplier controls the production, holds inventory and ships the products to the retailer to satisfy the external demand. We model the system as a Markov decision process, and show that the optimal production and transportation decisions are complex and non-monotonic. Therefore, we analyze two widely-used shipment policies in the industry as well, namely time-based and quantity-based shipment policies in addition to a hybrid time-and-quantity based shipment policy. We numerically compare the performances of these policies with respect to the optimal policy and analyze the effects of the parameters in the system.Computer scienceEngineeringIndustrial engineeringJournal Article315832300010Q14413