On the Unique Features and Benefits of On-Demand Distribution Models

To close the gap between current distribution operations and today’s customer expectations, firms need to think differently about how resources are acquired, managed and allocated to fulfill customer requests. Rather than optimize planned resource capacity acquired through ownership or long- term partnerships, this work focuses on a specific supply-side innovation – on-demand distribution platforms. On-demand distribution systems move, store, and fulfill goods by matching autonomous suppliers\u27 resources (warehouse space, fulfillment capacity, truck space, delivery services) to requests on-demand. On-demand warehousing systems can provide resource elasticity by allowing capacity decisions to be made at a finer granularity (at the pallet-level) and commitment (monthly versus yearly), than construct or lease options. However, such systems are inherently more complex than traditional systems, as well as have varying costs and operational structures (e.g., higher variable costs, but little or no fixed costs). New decision- supporting models are needed to capture these trade-offs

Design of a Distribution Network Using Primal-Dual Decomposition

Amethodtosolvethedesignofadistributionnetworkforbottleddrinkscompanyisintroduced.Thedistributionnetworkproposed includes three stages: manufacturing centers, consolidation centers using cross-docking, and distribution centers. The problem is formulated using a mixed-integer programming model in the deterministic and single period contexts. Because the problem considersseveralelementsineachstage,adirectsolutionisverycomplicated.Formedium-to-largeinstancestheproblemfallsinto large scale. Based on that, a primal-dual decomposition known as cross decomposition is proposed in this paper. This approach allows exploring simultaneously the primal and dual subproblems of the original problem. A comparison of the direct solution withamixed-integerlinealprogrammingsolverversusthecrossdecompositionisshownforseveralrandomlygeneratedinstances. Resultsshowthegoodperformanceofthemethodproposed

Formulation and solution of a two-stage capacitated facility location problem with multilevel capacities

In this paper, the multi-product facility location problem in a two-stage supply chain is investigated. In this problem, the locations of depots (distribution centres) need to be determined along with their corresponding capacities. Moreover, the product flows from the plants to depots and onto customers must also be optimised. Here, plants have a production limit whereas potential depots have several possible capacity levels to choose from, which are defined as multilevel capacities. Plants must serve customer demands via depots. Two integer linear programming (ILP) models are introduced to solve the problem in order to minimise the fixed costs of opening depots and transportation costs. In the first model, the depot capacity is based on the maximum number of each product that can be stored whereas in the second one, the capacity is determined by the size (volume) of the depot. For large problems, the models are very difficult to solve using an exact method. Therefore, a matheuristic approach based on an aggregation approach and an exact method (ILP) is proposed in order to solve such problems. The methods are assessed using randomly generated data sets and existing data sets taken from the literature. The solutions obtained from the computational study confirm the effectiveness of the proposed matheuristic approach which outperforms the exact method. In addition, a case study arising from the wind energy sector in the UK is presented

A computational comparison of several formulations for the multi-period incremental service facility location problem

The Multi-period Incremental Service Facility Location Problem, which was recently introduced, is a strategic problem for timing the location of facilities and the assignment of customers to facilities in a multi-period environment. Aiming at finding the strongest formulation for this problem, in this work we study three alternative formulations based on the so-called impulse variables and step variables. To this end, an extensive computational comparison is performed. As a conclusion, the hybrid impulse–step formulation provides better computational results than any of the other two formulations

Facility location, capacity acquisition and technology selection models for manufacturing strategy planning

Ankara : The Institute of Engineering and Science, Bilkent Univ., 1993.Thesis (Ph.D.) -- Bilkent University, 1993.Includes bibliographical references leaves 129-141.The primary aim of this dissertation research is to contribute to the manufacturing strategy planning process. The firm is perceived as a value chain which can be represented by a production-distribution network. Structural decisions regarding the value chain of a firm are the means to implement the firm’s manufacturing strategy. Thus, development of analytical methods to aid the design of production-distribution sytems constitutes the essence of this study. The differentiating features of the manufacturing strategy planning process within the multinational companies are especially taken into account due to the significance of the globalization in product, factor, and capital markets. A review of the state-of-the-art in production-distribution system design reveals that although the evaluation of strategy alternatives received much attention, the existing analytical methods are lacking the capability to produce manufacturing strategy options. Further, it is shown that the facility location, capacity acquisition, and technology selection decisions have been dealt with separately in the literature. Whereas, the interdependencies among these structural decisions are pronounced within the international context, and hence global manufacturing strategy planning requires their simultaneous optimization. Thus, an analytical method is developed for the integration of the facility location and sizing decisions in producing a single commodity. Then, presence of product-dedicated technology alternatives in acquiring the required production capacity at each facility is incorporated. The analytical method is further extended to the multicommodity problem where product- flexible technology is also available as a technology alternative. Not only the arising models facilitate analysis of the trade-offs associated with the scale and scope economies in capacity/technology acquisition on the basis of alternative facility locations, but they also provide valuable insights regarding the presence of some dominance properties in manufacturing strategy design.Verter, VedatPh.D

The Single Period Coverage Facility Location Problem: Lagrangean heuristic and column generation approaches

In this paper we introduce the Single Period Coverage Facility Location Problem. It is a multi-period discrete location problem in which each customer is serviced in exactly one period of the planning horizon. The locational decisions are made independently for each period, so that the facilities that are open need not be the same in different time periods. It is also assumed that at each period there is a minimum number of customers that can be assigned to the facilities that are open. The decisions to be made include not only the facilities to open at each time period and the time period in which each customer will be served, but also the allocation of customers to open facilities in their service period. We propose two alternative formulations that use different sets of decision variables. We prove that in the first formulation the coefficient matrix of the allocation subproblem that results when fixing the facilities to open at each time period is totally unimodular. On the other hand, we also show that the pricing problem of the second model can be solved by inspection. We prove that a Lagrangean relaxation of the first one yields the same lower bound as the LP relaxation of the second one. While the Lagrangean dual can be solved with a classical subgradient optimization algorithm, the LP relaxation requires the use of column generation, given the large number of variables of the second model. We compare the computational burden for obtaining this lower bound through both models

A two-stage dynamic model on allocation of construction facilities with genetic algorithm

Author name used in this publication: K. W. Chau2003-2004 > Academic research: refereed > Publication in refereed journalAccepted ManuscriptPublishe

A two-stage dynamic model on allocation of construction facilities with genetic algorithm

By their very nature, activities within the construction site are generally highly dynamic and complex. Hence, it is highly desirable to be able to formulate the optimal strategy for allocating site-level facilities at different times of the project. The principal objective is to minimize the total cost, which comprises the transportation, handling, capital, and operating costs at potential intermediate transfer centers of various plant and material resources over the entire project duration. The problem can be formulated as a mixed integer program, which entails enormous computational effort for the solution, in particular when the problem size is large. In this paper, a two-stage dynamic model is developed to assist construction planners to formulate the optimal strategy for establishing potential intermediate transfer centers for site-level facilities such as batch plants, lay-down yards, receiving warehouses, various workshops, etc. Under this approach, the solution of the problem is split into two stages, namely, a lower-level stage and an upper-level stage. The former can be solved by a standard linear programming method, whereas the latter is solved by a genetic algorithm. The efficiency of the proposed algorithm is demonstrated through case examples.Department of Civil and Environmental EngineeringAuthor name used in this publication: K. W. Cha

Influential Article Review- Annual Capital Outflow for an Institutional Investment Firm: A Flow-through Approach to Coordination of Network Support Chain Preparation and Financial Planning

This paper examines finance. We present insights from a highly influential paper. Here are the highlights from this paper: A common side effect of cross-linked global economies is that well-positioned middle-class companies are acquired by institutional investors, which formulate unreasonable return expectations in many cases. Therefore, the resulting payouts are often not in line with business operations so that even world market leaders get into trouble or close. In this context, we consider the case of a sanitary company, which had to manage the described situation after a business takeover. In order to coordinate the annual cash outflows to the investor with intra-organizational supply chain planning and financial planning, we propose a mixed-integer non-linear programming model that is based on the flow-to-equity discounted cash flow method. The objective is to maximize the present value of equity while determining annual cash outflows to the institutional investor during his engagement. As the decisions of the investor during his engagement influence possible operations of the company after his engagement, the residual value of equity (that influences the selling price) is considered. The modeling is based on cash flow series, which result from supply chain operations and restructuring on the one hand, and from financial transactions on the other. Financing is characterized by interest rates depending on the period the credit starts, the credit period, the debt limit of the company and the current total debt. As the latter is a result of the optimization, non-linearity arises. Nevertheless, both the expected demand scenario and further randomly generated demand scenarios of the sanitary company could be solved to the optimum with the commercial optimization package GAMS 23.8/SCIP 2.1.1 within acceptable computation times, if capacity profiles are assigned to the locations to depict feasible and/or preferred capacity developments. For our overseas readers, we then present the insights from this paper in Spanish, French, Portuguese, and German

Local cuts and two-period convex hull closures for big-bucket lot-sizing problems

Despite the significant attention they have drawn, big bucket lot-sizing problems remain notoriously difficult to solve. Previous work of Akartunali and Miller (2012) presented results (computational and theoretical) indicating that what makes these problems difficult are the embedded single-machine, single-level, multi-period submodels. We therefore consider the simplest such submodel, a multi-item, two-period capacitated relaxation. We propose a methodology that can approximate the convex hulls of all such possible relaxations by generating violated valid inequalities. To generate such inequalities, we separate two-period projections of fractional LP solutions from the convex hulls of the two-period closure we study. The convex hull representation of the two-period closure is generated dynamically using column generation. Contrary to regular column generation, our method is an outer approximation, and therefore can be used efficiently in a regular branch-and-bound procedure. We present computational results that illustrate how these two-period models could be effective in solving complicated problems