Application of Optimization in Production, Logistics, Inventory, Supply Chain Management and Block Chain

The evolution of industrial development since the 18th century is now experiencing the fourth industrial revolution. The effect of the development has propagated into almost every sector of the industry. From inventory to the circular economy, the effectiveness of technology has been fruitful for industry. The recent trends in research, with new ideas and methodologies, are included in this book. Several new ideas and business strategies are developed in the area of the supply chain management, logistics, optimization, and forecasting for the improvement of the economy of the society and the environment. The proposed technologies and ideas are either novel or help modify several other new ideas. Different real life problems with different dimensions are discussed in the book so that readers may connect with the recent issues in society and industry. The collection of the articles provides a glimpse into the new research trends in technology, business, and the environment

Inventory and Service Optimization for Self-serve Kiosks

In the retail industry, labor costs constitute a big chunk of total operating costs and retailers are advancing towards process automation to minimize their operating costs and to provide reliable services to their customers. One such example of technological advancement is self-service kiosks that are becoming an integral part of our life, whether it be for cashing a cheque, self-checkout at retail stores, airports, hospitals, or checkout-free stores. Although self-serve kiosks are cost-effective due to low setup and operating costs, the technology is relatively new and poses new research questions that have not been studied before. This thesis explores and addresses strategic and operational challenges associated with self-serve kiosk technology. The first part of the thesis is based on a collaboration with MedAvail Technologies Inc., a Canada-based healthcare technology company, developing self-serve pharmacy kiosk technology to dispense over-the-counter and prescription drugs. MedAvail faces several challenges related to assortment and stocking decisions of medications in the kiosk due to its limited capacity and the thousands of drugs being ordered in various quantities. We address these challenges by analyzing pharmaceutical sales data and developing a data-driven stochastic optimization approach to determine optimized kiosk storage capacity and service levels and recommend assortment and stocking decisions under supplier-driven product substitution. A column-generation based heuristic approach is also proposed to solve the models efficiently. The second part of the thesis extends the self-serve kiosk inventory planning problem to a robust optimization (RO) framework under fill rate maximization objective. We propose a data-driven approach to generate polyhedral uncertainty sets from hierarchical clustering and the resulting RO model is solved using column-and-constraint generation and conservative approximation solution methodologies. The proposed robust framework is tested on actual pharmacy sales data and randomly generated instances with 1600 products. The robust solutions outperform stochastic solutions with an increase in out-of-sample fill rate of 5.8%, on average, and of up to 17%. Finally, the third part of the thesis deals with an application of pharmacy kiosks to improve healthcare access in rural regions. We present a mathematical function to model customer healthcare accessibility as the expected travel distance when multiple pharmacy location (store and kiosks) choices are available to customers. Customer choice behavior is modelled using a multinomial logit (MNL) model where customer utility for a pharmacy location depends on travel distance which is not exactly known but rather depends on kiosk fill rate. We model the problem as a newsvendor problem with fill-rate dependent demand to decide on kiosk stock level (or capacity) to minimize the weighted sum of expected travel distance and total cost. Sensitivity analysis over modelling parameters is carried out to derive insights and to determine problem settings under which pharmacy kiosks improve customer accessibility

Essays on supply chain contracting and tactical decisions for inter-generational product transitions

Thesis (Ph. D.)--Massachusetts Institute of Technology, Sloan School of Management, 2007.Includes bibliographical references ().In this dissertation, we explore problems in two areas of Supply Chain Management. The first relates to strategic supplier management. The second focuses on tactical decisions on inventory and pricing during inter-generational product transition. In many industries, manufacturing firms use multiple competing suppliers in their component or product sourcing strategy. Chapter 2 studies optimal history-dependent contracts with multiple suppliers in a dynamic, uncertain, imperfect-information environment. The results provide an optimal contract structure for the manufacture and optimal performance and effort paths for the suppliers. We compare incentives in the form of product margin and that of business volume. Our results suggest that a volume contract may increase the total profit for the supply chain, partly due to its ability to allocate higher volume to the supplier that is more likely to input high effort, and partly through relative performance evaluation. However, for two suppliers with large asymmetry, it is better to contract independently with each supplier using margin incentive, rather than forcing them into a volume race. Chapter 3 studies the inventory planning decisions in the context of a technology product transition, i.e., when a new generation product replaces an old one. High uncertainties in a new product introduction coupled with long lead-time often lead to extreme cases of demand and supply mismatches. When a company runs out of the old product, a customer may be offered the new product as a substitute. We show that the optimal substitution decision is a time-varying threshold policy and establish the optimal planning policy. Further, we determine the optimal delay in new product introduction, given the initial inventory of the old product.(cont.) In Chapter 4, we study the optimal pricing decisions during a product transition. We restrict the new product price to be constant and formulate the dynamic pricing problem for the old product. We derive a closed-form solution for the optimal price under non-homogeneous Poisson demands. In addition, we compare three heuristic pricing policies: fixed-price, two-price, and myopic rolling-horizon policies. The results suggest that changing price once during the transition (the two-price policy) improves the profit dramatically and is near optimal.by Hongmin Li.Ph.D

Supply Chain

Traditionally supply chain management has meant factories, assembly lines, warehouses, transportation vehicles, and time sheets. Modern supply chain management is a highly complex, multidimensional problem set with virtually endless number of variables for optimization. An Internet enabled supply chain may have just-in-time delivery, precise inventory visibility, and up-to-the-minute distribution-tracking capabilities. Technology advances have enabled supply chains to become strategic weapons that can help avoid disasters, lower costs, and make money. From internal enterprise processes to external business transactions with suppliers, transporters, channels and end-users marks the wide range of challenges researchers have to handle. The aim of this book is at revealing and illustrating this diversity in terms of scientific and theoretical fundamentals, prevailing concepts as well as current practical applications

An overview of fuzzy techniques in supply chain management: bibliometrics, methodologies, applications and future directions

Every practice in supply chain management (SCM) requires decision making. However, due to the complexity of evaluated objects and the cognitive limitations of individuals, the decision information given by experts is often fuzzy, which may make it difficult to make decisions. In this regard, many scholars applied fuzzy techniques to solve decision making problems in SCM. Although there were review papers about either fuzzy methods or SCM, most of them did not use bibliometrics methods or did not consider fuzzy sets theory-based techniques comprehensively in SCM. In this paper, for the purpose of analyzing the advances of fuzzy techniques in SCM, we review 301 relevant papers from 1998 to 2020. By the analyses in terms of bibliometrics, methodologies and applications, publication trends, popular methods such as fuzzy MCDM methods, and hot applications such as supplier selection, are found. Finally, we propose future directions regarding fuzzy techniques in SCM. It is hoped that this paper would be helpful for scholars and practitioners in the field of fuzzy decision making and SCM

Sustainable Industrial Engineering along Product-Service Life Cycle/Supply Chain

Sustainable industrial engineering addresses the sustainability issue from economic, environmental, and social points of view. Its application fields are the whole value chain and lifecycle of products/services, from the development to the end-of-life stages. This book aims to address many of the challenges faced by industrial organizations and supply chains to become more sustainable through reinventing their processes and practices, by continuously incorporating sustainability guidelines and practices in their decisions, such as circular economy, collaboration with suppliers and customers, using information technologies and systems, tracking their products’ life-cycle, using optimization methods to reduce resource use, and to apply new management paradigms to help mitigate many of the wastes that exist across organizations and supply chains. This book will be of interest to the fast-growing body of academics studying and researching sustainability, as well as to industry managers involved in sustainability management

Strategic Positioning of United States Air Force Civil Engineer Contingency Equipment within the Supply Chain

The consolidation and forward positioning of critical inventories often provides substantial benefits over a geographically dispersed posture. Such benefits include, but are not limited to: increased inventory visibility, reduced transportation costs, and fewer manpower requirements. Presently, the United States Air Force (USAF) Civil Engineer (CE) community maintains a disseminated posture of equipment Unit Type Codes (UTCs), which regularly experiences inconsistencies in handling, tracking, and capability reporting. Provided the aforementioned discrepancies, this research effort examines several aspects surrounding the decision to potentially centralize critical CE inventories to either one or two locations. Specifically, the areas of cost, risk, and manpower are scrutinized to facilitate an objective decision by USAF CE senior leaders on whether or not to pursue an alternative equipment posture. Three scholarly articles are presented covering each area of interest and data supported recommendations are provided. The research offers insight concerning the decision of inventory consolidation as well as available methods to facilitate such a determination

Optimizing strategic sourcing in the healthcare supply chain with consideration of physician preference and vendor scorecards

This research focuses on the design of a procurement model for expensive medical supplies in a healthcare supply chain. A deterministic optimization model generates recommendations for optimal purchases of products in a given planning period. The model combines common concepts of supply chain procurement such as leveraging tiered pricing, ensuring supply base diversity with phenomena unique to healthcare supply chain such as consideration of physician preference for products. The deterministic optimization model minimizes total spend over a chosen planning period with consideration of four key decision parameters: Physician preference requirements (which are imposed as rules on product substitutability), Upper limits on vendor market share to ensure a suitably diverse supply base Vendors’ performance scores to impose standards for product pricing, quality, service, etc. Quantity discount rebate parameters for bulk purchasing to help contain medical costs The optimization model reveals the extent to which higher product substitutability and lower supply base diversity may help hospitals reduce total procurement costs. Experiments with the optimization model also reveal the potential consequences of rater biases in vendor scorecards on procurement cost. The various parameter combinations listed above may be used in negotiating contracts for better pricing. In summary, this research addresses questions pertinent to healthcare supply chains concerning the possible cost of physician preference for products, the impact of subjective scorecards on procurement costs, the effect of planning period on procurement plans, and the cost of vendor diversity

Optimising Supply Chain Performance via Information Sharing and Coordinated Management

Supply chain management has attracted much attention in the last decade. There has been a noticeable shift from a traditional individual organisation-based management to an integrated management across the supply chain network since the end of the last century. The shift contributes to better decision making in the supply chain context, as it is necessary for a company to cooperate with other supply chain members by utilising relevant information such as inventory, demand and resource capacity. In other words, information sharing and coordinated management are essential mechanisms to improve supply chain performance. Supply chains may differ significantly in terms of industry sectors, geographic locations, and firm sizes. This study was based on case studies from small and medium sized manufacturing supply chains in People Republic of China. The study was motivated by the following facts. Firstly, small and medium enterprises have made a big contribution to China’s economic growth. Several studies revealed that most of the Chinese manufacturing enterprises became aware of the importance of supply chain management, but compared to western firms, the supply chain management level of Chinese firms had been lagging behind. Research on supply chain management and performance optimisation in Chinese small and medium sized enterprises (SMEs) was very scarce. Secondly, there had been plenty of studies in the literature that focused on two or three level supply chains whilst considering a number of uncertain factors (e.g. customer demand) or a single supply chain performance indicator (e.g. cost). However, the research on multiple stage supply chain systems with multiple uncertainties and multiple objectives based on real industrial cases had been spared and deserved more attention. One reason was due to the lack of reliable industrial data that required an enormous effort to collect the primary data and there was a serious concern about data confidentiality from the industry aspect. This study employed two SME manufacturing companies as case studies. The first one was in the Aluminium industry and another was in the Chemical industry. The aim was to better understand the characteristics of the supply chains in Chinese SMEs through performing in-depth case studies, and built models and tools to evaluate different strategies for improving their supply chain performance. The main contributions of this study included the following aspects. Firstly, this study generalised a supply chain model including a domestic supply chain part and an international supply chain part based on deep case studies with the emphasis on identifying key characteristics in the case supply chains, such as uncertainties, constraints and cost elements in association with flows and activities in the domestic supply chain and the international supply chain. Secondly, two important SCM issues, i.e. the integrated raw material procurement and finished goods production planning, and the international sales planning, were identified. Thirdly, mathematical models were formulated to represent the supply chain model taking into account multiple uncertainties. Fourthly, several operational strategies utilising the concepts of just-in-time, safety-stock/capacity, Kanban, and vendor managed inventory, were evaluated and compared with the case company's original strategy in various scenarios through simulation methods, which enabled quantification of the impact of information sharing on supply chain performance. Fifthly, a single objective genetic algorithm was developed to optimise the integrated raw material ordering and finished goods production decisions under (s, S) policy (a dynamic inventory control policy), which enabled the impact of coordinated management on supply chain performance to be quantified. Finally, a multiple objectives genetic algorithm considering both total supply chain cost and customer service level was developed to optimise the integrated raw material ordering and finished goods production with the international sales plan decisions under (s, S) policy in various scenarios. This also enabled the quantification of the impact of coordinated management on supply chain performances