1,721,015 research outputs found
Revisiting foundations in lot sizing - connections between Harris, Crowther, Monahan, and Clark
No full textWhile many review articles exist on (deterministic) lot sizing models used in the context of price and quantity discounts, buyer-vendor coordination, supply chain management, and joint economic lot sizing problems, they do not convey the impact of important findings which date back to at least 2002,or, in hindsight, to 1984. As a result, many recent articles still model the financial implications of lot sizing decisions without having the assurance that these models would help the firm(s) involved in maximising the Net Present Value (NPV). This paper therefore reviews these findings, while adding also its own contributions, as to convey the general importance to lot sizing theory. We show that the underlying principles used in the four key articles that have led to a division in modelling approaches are in fact all in line with NPV, and argue that therefore there should not be these discrepancies that currently persist in the literature. We establish the connections between these four strands of literature using the solution to a simple variation of Harris' EOQ model, deriving thereby results from Boyaci and Gallego (2002) and Beullens and Janssens (2011), but showing their general applicability to any type of supply-chain structure. The breath of implications to deterministic lot sizing theory is illustrated using practical examples. We present a stochastic version of the model of Crowther (1964), which is arguably the least understood and applied model, but on the other hand the most important one in realising how these modelling strands can be unifie
Joint inventory and distribution strategy for online sales with a flexible delivery option
No full textThis paper develops a strategy to jointly optimize the inventory and distribution for an online sales firm. The firm has to decide how to distribute the products from its warehouse to customers: this can either be done by using a company-owned vehicle, or by outsourcing to a third-party transportation company. The online sales environment includes a flexible delivery option that gives a discount to customers in return. This option is offered when the inventory level in the warehouse is lower than a threshold level. Customers accepting flexible delivery pay a deposit at the time they place the order and pay the remaining reduced price at the time of delivery. By offering the flexible delivery option, the firm aims to reduce the cost of distribution to the customers as well as postpone the timing of paying an outside supplier for stock replenishment. Additionally, this allows the firm to use on hand stock effectively to respond to more urgent customer requests. As the timing of cash-flows are dependent on the customer behaviour and the inventory and distribution strategy, the profit function is the Net Present Value of future cash-flows. We analyze the benefit of flexible delivery to the firm and perform sensitivity analysis with respect to various parameters. The profitability of flexible delivery depends on price setting and customer behaviour. Flexible delivery, in this model, has great potential to reduce transport distances and emissions when firms use their own vehicles
Closed-loop supply chain network equilibrium under legislation
No full textThis paper expands previous work dealing with oligopolistic supply chains to the field of closed-loop supply chains. The model presented has been formulated with the intent of examining issues surrounding the recent European Union directive regarding waste of electric and electronic equipment (WEEE). The network modelled consists of manufacturers and consumer markets engaged in a Cournot pricing game with perfect information. Closed-loop supply chain network equilibrium occurs when all players agree on volumes shipped and prices charged. Certain properties of the model are examined analytically. Numeric examples are included and have been solved using an extragradient method with constant step size. The equilibrium solution obtained provide interesting insights that lead into a number of areas for future research
A semi-automated design of instance-based fuzzy parameter tuning for metaheuristics based on decision tree induction
Full text linkTwo main concepts are established in the literature for the Parameter Setting Problem (PSP) of metaheuristics: Parameter Tuning Strategies (PTS) and Parameter Control Strategies (PCS). While PTS result in a fixed parameter setting for a set of problem instances, PCS are incorporated into the metaheuristic and adapt parameter values according to instance-specific performance feedback. The idea of Instance-specific Parameter Tuning Strategies (IPTS) is aiming to combine advantages of both tuning and control strategies by enabling the adoption of parameter values tailored to instance-specific characteristics a priori to running the metaheuristic. This requires, however, a significant knowledge about the impact ofinstance-characteristics on heuristic performance. This paper presents an approach that semi-automatically designs the fuzzy logic rule base to obtain instance-specific parameter values by means of decision trees. This enables the user to automate the process of converting insights about instance-specific information and its impact on heuristic performance into a fuzzy rule base IPTS system. The system incorporates the decision maker's preference about the trade-off between computational time and solution qualit
Improving inventory system performance by selective purchasing of buyers’ willingness to wait
No full textWe develop a demand postponement mechanism to improve the performance of a single item, periodic review inventory system with advance demand. The focus in the literature has been on how to stimulate customers towards advance demand. Predicting how demand will shift can be problematic, however, and backorders may still occur. We focus on how a firm can address backorders under a given advance de- mand pattern by a mechanism of compensation from which both the firm and the customers will benefit: the firm may offer a discount to customers for accepting later deliveries at a promised delivery date. De- livery postponement offers are made selectively, i.e. in some periods and to some customers only when there is a benefit for the firm to do so. Customers may decline the offer, but then face the probability of a backorder. In each period, the firm has to decide whether to make delivery postponement offers and for how long, and whether to order from its supplier and how much. We formulate the problem as a Markov Decision Process and solve it by backward induction. Numerical examples illustrate the properties of the state-dependent policies obtained for both uncapacitated and capacitated inventory systems. The postponement mechanism in capacitated systems leads to policies that differ from the threshold policy identified as optimal in the literature. Overall, the approach shows promise to improve system performance more efficiently compared to strategies aiming to increase advance demand in the system
Planning for shortages? Net present value analysis for a deteriorating item with partial backlogging
No full textThis paper develops inventory models to help answer strategic questions concerning whether planning for shortages offers financial benefits. A production-inventory system producing a deteriorating product in batches at a finite production rate with partial backordering is considered. Customers pay a deposit when placing a backorder. Backordered items receive a discount on the sales price. As lost sales may lead to customers not returning, the demand rate may depend on the fraction of lost sales. We develop a cash-flow based profit maximising Net Present Value (NPV) model without the inventory cost parameters commonly used in this context: unit holding cost, unit backorder cost, unit deterioration cost, and unit lost sales cost. The model finds the optimal inventory policy just like NPV models that discount the traditional parameters but has the advantage of not needing to estimate the value of the traditional parameters. It is shown that in models based on discounting the traditional parameters, the parameters are not exogenously determinable but are non-trivial functions of non-financial endogenous system parameters such as the production rate, annual demand rate, and backorder rate. Extensive numerical experiments illustrate how cash-flow NPV models provide insights into the value of planning for shortages and strategic choices about the design of the production-inventory system. It also provides insight into the classical problem of how to interpret unit backorder cost and unit lost sales cost. The study indicates that these insights cannot be reliably obtained from NPV models based on discounting unit backorder costs and unit lost sales costs.<br/
Waste reduction in the supply chain of a deteriorating food item - impact of supply structure on retailer performance
No full textIn this article, we examine how an Operational Research (OR) modeling approach can help in identifying how structural components in the supply process of a food product subject to a small probability of almost immediate failure affects the amount of waste arising at the retailer. This process can be viewed as the cumulative effect of various possible causes, including (apparent) product flaws and breakage. This category of waste, in contrast to products that are removed based on reaching their best before or use-by date, are also having little potential for redistribtion, and may thus be most targeted in future waste reduction legislative initiatives. We develop some relatively easy to calculate measures to help a retailer with identifying the financial implications of waste production in relation to some supply source characteristics, the financial motivation of its supplier to tackle item deterioration at the retailer level, and how this is affected by the level of logistics collaboration. We also discuss how the model can help in deriving the relative benefit of technological, logistical, supplier selection, and marketing strategies available to the retailer to meet future legislative waste reduction targets, and derive conclusions with respect to the design of legislative instruments
Adapting inventory models for handling various payment structures using net present value equivalence analysis
Full text linkClassic inventory models use average cost functions. It is generally accepted that these models should account for the time value of money. They do so not by considering the timing of cash-flows, but by including opportunity costs. The Net Present Value (NPV) framework has long been used to compare these models with. We formalise NPV Equivalence Analysis (NPVEA) under various payment structures, and apply it to a few classic inventory models. While taking the linear approximation is typically part of the process to find equivalence, the essence is to disregard the parameters of a classic inventory model but instead start from cash-flow structures between firms. It is demonstrated how this leads to different plausible interpretations of, or variations to, classic inventory models, in particular for payment structures that differ from conventional assumptions. We identify situations with negative holding costs, which indicates that more features from the real world must be added into the decision model. We illustrate that in addition to capital costs, firms can enjoy capital rewards. These rewards may not always affect the firm's inventory decisions, but are in general useful for finding the impact of changes to various parameters on the firm's future profit
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