European J. of Industrial Engineering (22 papers in press)
The impact of online sales in centralized and decentralized dual-channel supply chains
by Subrata Saha
Abstract: This paper studies a supply chain structure featuring two different types of distribution channels through which manufacturers sell products. The centralised and decentralised distribution channels considered in this study are affected by online sales outside the structured channels. In the centralised distribution channel, two retail stores located in geographically distinct markets are operated by a single owner. In the decentralised distribution channel, two retailers independently operate two retail stores. In the non-cooperative scenario, the manufacturer always prefers the decentralised distribution channel irrespective of whether an online channel is used. To achieve channel coordination, a revenue-sharing contract is applied, but it can be used to coordinate only the decentralised distribution system. Therefore, a modified revenue-sharing contract is proposed to coordinate the centralised distribution system. The analytical study reveals that without coordination among the channel members, the manufacturer always earns maximum profit in decentralised distribution systems. However, if the supply chain is coordinated, then the manufacturer receives more benefits from using the centralised distribution systems under certain conditions. Propositions are presented to describe the characteristics of distribution structures, and to provide meaningful management guidelines for coordinating them. Extensive numerical investigations are also presented.
Keywords: Supply chain management; Dual-channel supply chain; Revenue sharing contract; Pricing strategy; Stackelberg.
Flowshop Sequence-dependent Group Scheduling with Minimization of Weighted Earliness and Tardiness
by Taha Keshavarz, Nasser Salmasi, Mohsen Varmazyar
Abstract: In this research, we approach the flowshop sequence-dependent group scheduling problem with minimization of total weighted earliness and tardiness as the objective for the first time. A mixed integer linear programing model is developed to solve the problem optimally. Since the proposed research problem is proven to be NP-hard, a hybrid meta-heuristic algorithm based on the particle swarm optimization (PSO) algorithm, enhanced with neighborhood search is developed to heuristically solve the problem. Since the objective is a non-regular, a timing algorithm is developed to find the best schedule for each sequence provided by the metaheuristic algorithm. A lower bounding method is also developed by reformulating the problem as a Dantzig-Wolf decomposition model to evaluate the performance of the proposed PSO algorithm. The computational results, based on using available test problems in the literature, demonstrate that the proposed PSO algorithm and the lower bounding method are quite effective, especially in the instances with loose due date.
Keywords: Earliness and tardiness; Sequence-dependent setup time; Group scheduling; Dantzig-Wolf decomposition; Particle swarm optimization.
Supply Chains Competition with Vertical and Horizontal Information Sharing
by Zhaobo Chen, Chunying Tian, Ding Zhang
Abstract: This paper studies the incentive for vertical and horizontal information sharing in two competing supply chains with uncertain demand. Retailers obtain the uncertain demand information from the market, and can exchange the private information with each other. We investigate the equilibrium information sharing arrangement in the competing supply chains and discuss how expected payoffs of the firms and the supply chains is impacted by horizontal information sharing. The results show that no vertical information sharing in both supply chains is the unique equilibrium in one-shot game, and horizontal information sharing wont affect the vertical information sharing strategy for the competing supply chains. However, horizontal information sharing will increase the supply chain profits if the competition between two supply chains is sufficiently less intense. Furthermore, we analyse the conditions of prisoners dilemma for the equilibrium information sharing arrangement and the perfect Nash equilibrium of the repeated game.
Keywords: supply chain management; supply chain competition; information sharing.
Scheduling TV advertisements via genetic algorithm
by Kateryna Czerniachowska
Abstract: Television Advertising is vital to the television industry, and is one of the most popular ways for advertisers to increase sales. This paper discusses the problem of scheduling TV advertisements according to each advertisers needs and budget limitations, with the objective of maximizing total viewership. The proposed solution is the genetic algorithm, and its efficiency has been evaluated using list and random-list algorithms during long (1 month) and short (1 week) advertising campaign periods. Computational results show that this algorithm can obtain satisfactory results for real-world test problems, based on data from a marketing research company
Keywords: scheduling; media planning; advertising; genetic algorithm; heuristics.
Side-sensitive synthetic double sampling control charts
by Jena Claude Malela-Majika, Eeva Maria Rapoo
Abstract: This paper develops two new synthetic double sampling (SDS) charts based on the revised side-sensitive (RSS) and modified side-sensitive (MSS) schemes for monitoring the location process parameter. In this paper, we first give the operation of the proposed charts and secondly, the exact form expression of the probability of declaring a sampling stage as conforming. Thirdly, we investigate the zero-state and steady-state performances of the proposed charts in terms of the out-of-control average run-length, average sample size, average number of observations to signal and average extra quadratic loss. Finally, we compare the performance of the new charts with some well-known charts. It is observed that the proposed charts have attractive zero-state and steady-state properties and outperform the existing SDS chart and all other competing charts in many situations. An example of a real-life application is given to facilitate the design and implementation of the proposed charts.
Keywords: average number of observations to signal; average run-length; average sample size; extra quadratic loss function; revised and modified side-sensitive schemes; steady-state mode; synthetic double sampling Scheme; zero-state mode.
An integrated model of statistical process control and maintenance planning for a twostage dependent process under general deterioration
by Hasan Rasay, Mohammad S. Fallahnezhad, Yahia Zaremehrjerdi
Abstract: Consider a two-stage dependent process in which each stage has a unique quality characteristic. Based on a regression formula, the quality characteristic of the second stage is dependent on that of the first stage. There may be two assignable causes in the process. Each cause can lead to a change in the mean of the process. The process failure mechanism for each stage follows a general continuous distribution function, and two control charts are simultaneously used to monitor the process. Specifically, the first stage is monitored using a Shwehart control chart, and the second stage is monitored using a cause-selecting control chart. An integrated model is developed for Maintenance Planning (MP) and Statistical Process Control (SPC). To analyze the performance of the integrated model, a stand-alone model for SPC is developed. A comparison of the two models, i.e., the integrated model and the stand-alone model, is conducted. Finally, using a fractional factorial design, a depth analysis is performed about the integrated model.
Keywords: Statistical process control; Maintenance planning; Multi-stage dependent process; Failure mechanism; Integrated model; Cause-selecting control chart.
A Continuous Review (s, S) Inventory System With Postponed Demands at
by B. Sivakumar, J. Sebastian Arockia Jenifer
Abstract: In this article, we present a continuous review (s, S) inventory system with a service facility consisting of finite waiting hall (capacity N) and a single server. The customers arrive according to a Poisson process. The individual customers unit demand is satisfied after a random time of service, which is assumed to be exponential. An arriving customer, who finds the waiting hall is full, enters into the pool of infinite size or leaves the system which is according to a Bernolli trial. The joint probability distribution of the number of customers in the pool, number of customers in the waiting hall and the inventory level is obtained in the steady-state case. Various stationary system performance measures are computed and total expected cost rate is calculated. The results are illustrated numerically.
Keywords: Continuous Review (s; S) Inventory System; Postponed Demands; Service Facility; Waiting Time Analysis.
Effect of supply disruption on inventory policy
by Chirakiat Saithong, Huynh Trung Luong
Abstract: This research examines a two-stage supply chain that comprises a supplier who is subject to stochastic disruption, and a retailer who has to deal with supply disruption by holding inventory. Under a periodic-review base-stock inventory policy, the main objectives of this study are to determine the optimal inventory policy in the presence of stochastic supply disruption so as to minimise the total inventory cost as well as to analyse the impact of supply disruption on the optimal inventory policy. In this research, the length of a supply disruption is modelled as a continuous random variable, distinguishing it from previous research which modelled the length of a supply disruption as a discrete random variable that receives values only as multiples of the length of a review period. Numerical experiments have been conducted to illustrate the applicability of the proposed inventory model and to examine the effects of various input parameters on the optimal inventory policy. Furthermore, compared with the optimal inventory policy derived when the length of a supply disruption is considered as a multiple of the length of a review period, the proposed inventory model in this research can help derive a more precise optimal inventory policy.
Keywords: Supply disruption; disruption mitigation strategy; base stock inventory policy; renewal reward process.
Development of an Operational and Tactical Decision Support Tool for a Canadian Beverage Firm: A Case Study
by Mehmet A. Begen, Martin L. Puterman, Hongtu (Ernest) Wu
Abstract: This paper describes a logistics optimization case study for a Canadian beverage manufacturer and distributor. The goal was to determine production, distribution and inventory plans for a given product line to help the company with its challenges due to production shortages, stock-outs and high transportation costs in a new and highly competitive market. We built and implemented an optimization model in Excel with VBA as a customized planning tool. Although we originally designed the tool for operational planning, the beverage company first used it for tactical planning (in price negotiations with the firms subcontractors, deciding whether to buy a bankrupt subcontractor production site, and quantification of carrying extra inventory). The tool has changed the way the company conducts its business planning by evaluating what if scenarios, finding an optimal operational plan, and forcing the company to think more strategically and for longer horizons.
Keywords: Operations Research Practice; Decision Support Systems; Optimization; Operational and Tactical Planning; Excel Solver and VBA.
Two-echelon supply chain coordination with advertising-driven demand under Stackelberg game policy
by Jiseong Noh, Jong Soo Kim, Biswajit Sarkar
Abstract: This paper develops a two-echelon supply chain model with a single manufacturer and a single retailer, where the demand is sensitive to advertising and retail price. To resolve the supply chain coordination, three strategies are introduced as retailer leader-manufacturer follower, manufacturer leader-retailer follower, and centralized supply chain. Based on these strategies, this paper suggests an optimal production rate, a production lot size, shortage level, an advertising expenditure, and retail price. Stackelberg approach is employed for solving leader-follower game to obtain the maximum profit of both manufacturer and retailer. The improved algorithm is developed to obtain the numerical results. For testing the model, this paper considers several numerical experiments, graphical illustrations, and sensitivity analysis. The result shows that the strategy of retailer leader-manufacturer follower obtains the highest profit than other strategies.
Keywords: Supply chain management; advertising expenditure; game theory; production/inventory; Stackelberg approach.
Optimal Ordering And Replenishment Policy For A Vendor-Buyer System Under Varying Replenishment Intervals And Delayed Payment
by Ata Allah Taleizadeh, Hamid Reza Zarei, Bhaba R. Sarker
Abstract: The replenishment intervals can be probabilistic when the system or the supplier has problem with manufacturing or shipping the goods. In this paper, an economic order quantity (EOQ) model with probabilistic replenishment intervals and permissible delay in payments with partial backordering is developed. This paper considers three different possible situations and suggests optimal inventory policy for each situation separately regarding the amount of expected order quantity and replenishment-up-to level that maximizes the expected cyclic profit for the buyers. The model is analyzed for the uniform and exponential probability distribution functions (pdf) for time of replenishment and a closed-form solution is achieved in all cases. Finally, a sensitivity analysis is performed to know the general functional behavior and to clarify the applicability of the proposed model when the system behavior is unstable. The results indicate that a customer can obtain the optimum replenishment-up-to level and order quantity when the replenishment intervals is probabilistic in three different possible situations.
Keywords: Varying replenishment intervals; delay in payments; partial backordering; incentive scheme.
A blood distribution problem with new transportation options An application for the Turkish Red Crescent
by Atıl Kurt, Ferda Can Çetinkaya, Meral Azizoğlu
Abstract: This paper considers the blood distribution problem in the Central Anatolian Regional Blood Centre of the Turkish Red Crescent and proposes several demand satisfaction options considering the irradiation centres, urgent demands, and product availability. Our aim is to maximize the total weighted blood demand satisfaction. To address the problem, we develop a mixed integer linear programing model and propose a hybrid genetic algorithm. The results of our experiments have revealed that the mathematical model cannot handle even small sized problem instances in reasonable times; however, the hybrid genetic algorithm is capable of handling complex daily operations of the Turkish Red Crescent.
Keywords: blood distribution system; transportation options; vehicle routing; mixed integer linear programming model; genetic algorithm.
On an automated material handling system design problem in cellular manufacturing systems
by Woo-Sung Kim, Dae-Eun Lim
Abstract: We consider the automated material handling system design problem in a cellular manufacturing system (CMS). Simple transportation units including low-cost automated guided vehicles are quite often used in CMSs in South Korea. It is assumed that a transportation unit circulates among a group of cells (stations), and the unit is assumed to collect items from the output buffer of the stations. Collected items are unloaded at a cell which functions as a storage. We are interested in the capacity of the transportation unit, or the number of cells the transportation should visit. Using an embedded Markov chain, we derive the remaining capacity of the transportation unit when it leaves each station. In addition, the probability that the transportation unit is full at its departure epoch is also derived.We provide various numerical results including the effect of volatility of the arrival rates among stations.
Keywords: Seru Production System; Cellular Manufacturing System; Queueing Analysis; Multi-load AGV; Tandem AGV.
A coordinated production planning model with capacity expansion for supply chain networks
by Ming-Hua Lin, Jung-Fa Tsai, Pei-Chun Wang, Yu-Ting Ho
Abstract: Developing a flexible supply chain is important for enterprises to face market volatility and diversity. In order to satisfy order requirements under demand uncertainty, this study constructs a coordinated production planning model of supply chain networks considering production capacity expansion. Besides, the proposed model involves batch production that is commonly used in many companies. The constructed model is then linearized as a mixed-integer linear programming problem to guarantee global optimality. The solution of the reformulated model determines the optimal production, transportation and inventory levels as well as the optimal batch production operations and capacity expansion strategy. Several numerical experiments are conducted to demonstrate the effectiveness of the proposed method and the impacts of production capacity expansion on the operations of the supply chain.
Keywords: supply chain management; coordinated production planning model; demand uncertainty; batch production; flexible production capacity; linear transformation; deterministic optimization.
A queueing system with inventory and competing suppliers
by Mohammad Saffari, Mohsen S. Sajadieh, Farhad Hassanzadeh
Abstract: A single-server queuing system is considered where service consumes one unit of inventory which is maintained by two suppliers with different price and replenishment lead times. During inventory stockout, new customers refuse to enter the system (lost sales) but the existing ones remain in queue until inventory becomes available again (backlogged demand). We analytically derive the joint distribution of queue length and on-hand inventory in steady state and determine supplier-specific ordering policies that maximize the average system profit. A special case of the system with multiple servers is addressed. A numerical study reveals dynamics of the optimal ordering policy with respect to price and replenishment lead-times.
Keywords: Inventory; Competing suppliers; Queueing; Stationary distribution.
A green vehicle routing problem with time windows considering the heterogeneous fleet of vehicles: Two metaheuristic algorithms
by Neda Rezaei, Sadoullah Ebrahimnejad, Amirhossein Moosavi, Adel Nikfarjam
Abstract: In this paper, the green vehicle routing problem with time windows constraint is studied in the presence of a heterogeneous fleet of vehicles and filling stations. In addition, the number of vehicles and their fuel tank capacity are both limited. The main contribution of this study is the simultaneous consideration of these features, which makes the problem more practical. For this purpose, a mixed integer linear programming model that minimizes the transportation costs and 2 (or carbon dioxide) emissions, is proposed. Furthermore, a genetic algorithm and a population-based simulated annealing are developed to find high-quality solutions for large-scale instances. To validate the proposed model and algorithms, 28 instances are generated using a benchmark database. The computational results demonstrate that both algorithms provide efficient solutions regarding the objective function value and CPU time. Finally, a comprehensive sensitivity analysis is carried out to show the importance of features mentioned above.
Keywords: Green Vehicle Routing Problem; Time Windows; Heterogenous Fleet of Vehicles; Filling Station; Genetic Algorithm; Simulated Annealing.
A novel hierarchical approach for a heterogeneous 3D pallet loading problem subject to factual loading and delivery constraints
by Sena Kır, Harun Resit Yazgan
Abstract: This paper presents a hierarchical approach, which consists of a two-stage genetic algorithm and a mixed integer linear programming, for a heterogeneous three-dimensional pallet loading problem in consideration of the rotation, the relative positioning, the load-bearing strength, and the fragility constraints. Stage # 1 of the proposed two-stage genetic algorithm provides to reduce the number of items to be packed by combining similar items based on a stack-building approach. And, stage # 2 provides to estimate the number of required free pallets. After that, the proposed mixed integer linear programming solves the problem considering the findings of the proposed two-stage genetic algorithm. The proposed hierarchical approach was tested on well-known instances leading to favourable results and compared with a decent solution approach. In addition, a case study was presented.
Keywords: logistics; 3D pallet loading problem; MILP; genetic algorithm; intelligent dynamic crossover.
One approach to evaluate the influence of engineering characteristics in QFD method
by Tanja Parezanovi?, Marijana Petrovi?, Nataa Bojkovi?, Dragan Pamu?ar
Abstract: Evaluation of engineering characteristics (ECs) according to customer requirements (CRs) is the most decisive step of the house of quality in quality function deployment (QFD) method. In most cases, high degrees of correlation between ECs exist and should be modelled. The paper develops a specific measure ('influence gap') and novel underlying procedure (smallest gap technique) for ECs evaluation aiming to capture all interdependencies. The influence gap enables to characterise each EC according to its distance from ideal-maximum influence on all requirements. The relationships between CRs and ECs and their inter-relationships are obtained using interval-valued fuzzy DEMATEL method. From the practical point of view, the most important information for decision maker(s) generated by the model is the clear insight about the contribution of each EC when launching a new product/service. Practicability and usability of the proposed methodology is illustrated over a specific transportation service. [Received 6 January 2018; Accepted 2 December 2018]
Keywords: quality function deployment; QFD; DEMATEL; multicriteria decision making; MCDM; interval-valued fuzzy numbers; Smallest Gap Technique; carpooling; customer requirements; engineering characteristics.
AN EOQ MODEL FOR DETERIORATING ITEM WITH PROMOTIONAL EFFORT AND
CREDIT LINKED DEMAND
by ANINDITA KUNDU
Abstract: In the traditional supply chain models, it is observed that usually suppliers oer to the retailers a credit period and also the retailer to the customers to stimulate sales and reduce inventory. This practice of retailers increases the default risk of the percentage of customers not willing to pay back. In this paper, an inventory model has been developed under two levels of trade credit policy with customers' default risk consideration for a deteriorating item having a maximum lifetime. The supplier oers a partially permissible delay in payment per order and the retailer, in turn, provides a part of it to customers. Here, both demand and default risk are functions of the customer's trade credit period, whereas demand is also promotional eort sensitive. To mimic the changing market, the inventory costs are assumed to be imprecise. The models are illustrated numerically and some sensitivity analyses are presented.
Keywords: Two-level partial trade credit period; Promotional eort; Default risk; Time-dependent deteri- oration; Credit-sensitive demand and default risk.
A dominance-based heuristic to minimize completion time variance in a single machine system
by H.M. Soroush
Abstract: This paper addresses the problem of minimizing the variance of job completion times in a deterministic single-machine scheduling system. Minimizing completion time variance is an appropriate objective in scheduling environments where service uniformity is essential. Due to the NP-hard nature of the problem, various heuristics have been presented to obtain a near-optimal solution. In this paper, we introduce a new heuristic based on some powerful precedence (dominance) relation structures, including the concepts of permanent and temporary precedence (dominance) relationships, to determine the positions of adjacent and non-adjacent jobs in a sequence. Our computational experiments demonstrate that the proposed heuristic significantly outperforms the existing ones in deriving the optimal or near-optimal solutions for three well-known sets of benchmark problems and some large randomly generated instances.
Keywords: Scheduling; single machine; completion time variance; heuristic; precedence; dominance.
Humanitarian supply chain network design using data envelopment analysis and multi-objective programming models
by Jae-Dong Hong
Abstract: Emergency events such as natural disasters or terrorist attacks seem to occur anywhere and tend to increase. This paper studies a humanitarian supply chain network (HTSCN) design problem in a pre-disaster scenario, which consists of finding the optimal emergency response facility (ERF) locations and allocation scheme of humanitarian supplies through ERFs, where all ERFs are under the risk of disruptions. Naturally, this type of design problem should deal with multiple goals. An innovative two-step framework of designing efficient HTSCN by combining multi-objective programming (MOP) models with Data Envelopment Analysis (DEA) is proposed. A case study using the historical data on the disasters in South Carolina, USA, is presented to illustrate the effectiveness and efficiency of the proposed combining framework. The case study demonstrates that the proposed procedure would help practitioners and researchers generate a finer evaluation of efficiency and would provide a benchmarking methodology for designing HTSCN system.
Keywords: humanitarian supply chain network; emergency response facility; data envelopment analysis; multi-objective programming approach.
Modelling and Optimizing the Multi-item Stochastic Joint Replenishment Problem with Uncertain Lead-time and Controllable Major Ordering Cost
by Xue-Yi Ai
Abstract: In this paper, we extend the existing stochastic joint replenishment model to a more realistic condition by considering uncertainties in lead-time and effective investment to reduce the major ordering cost. The aim is to determine the optimal strict cyclic replenishment policy and the optimal major ordering cost simultaneously to minimize the total cost. The objective cost function is approximated by expressing one element of the cost function as a Taylor series expansion. A bounds-based heuristic algorithm is then developed to solve the proposed model. The performance of the algorithm and the quality of the approximation are examined by computational experiments. The results of the models without considering uncertainty and ordering cost reduction are presented to illustrate the effectiveness of the proposed model. Experimentation and analysis of results demonstrate that the standard deviation of lead-time has a significant effect on the system.
Keywords: joint replenishment problem; stochastic demand; uncertain lead-time; inventory; optimization; major ordering cost reduction; heuristics.