European J. of Industrial Engineering (12 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.