Authors: Yang-Byung Park; Hae-Soo Park
Addresses: Department of Industrial and Management Systems Engineering, Kyung Hee University, Yongin-si, Gyeonggi-do, Republic of Korea ' Department of Industrial and Management Systems Engineering, Kyung Hee University, Yongin-si, Gyeonggi-do, Republic of Korea
Abstract: The operation of smart vending machine systems creates decision-making problems under vendor-managed inventory schemes involving product allocation to vending machine storage compartments, replenishment points of products and replenishment thresholds at vending machines, and vehicle routes for inventory replenishments, all of which have critical effects on system profit. This paper considers the operation of smart vending machine systems in which possible product substitutions occur when customers face stock-outs. A simple, intuitive procedure is presented to estimate substitution probabilities, construct an integrated optimisation mathematical model for the operation problem of smart vending machine systems, and develop a two-phase heuristic based on this mathematical model. The results of computational experiments demonstrate the substantial economic benefit of the smart vending machine system over the conventional system. Sensitivity analysis indicates that certain input variables significantly impact the effectiveness of the smart vending machine system. [Received 28 August 2013; Revised 26 December 2013; Accepted 11 March 2014]
Keywords: smart vending machines; product allocation; operation problems; vendor-managed inventory; VMI; performance evaluation; replenishment points; replenishment thresholds; vehicle routing; inventory replenishments; product substitutions; stock-outs; optimisation; mathematical modelling.
European Journal of Industrial Engineering, 2015 Vol.9 No.4, pp.409 - 431
Available online: 02 Jul 2015 *Full-text access for editors Access for subscribers Purchase this article Comment on this article