Analysis of Operations Management Problems in Currency and Food Supply Chains

This dissertation is constituted of three essays addressing operational issues be- longing to two research domains including (i) Logistics and Supply Chain Management for Currency Supply Network and (ii) Facility Location and Capacity Optimization for Food Supply Chains. Minimum cost ow network model and mixed integer programming model (linear and nonlinear) are developed to analyze and optimize supply chains of banknotes, coins, and foods. Approaches developed are general and can easily be applied to other categories of supply chains under different settings around the world with appropriate modifications. The first domain comprises two essays with different scopes and objectives, in which two unique monetary supply chains with distinctive operations and governmental regulations are analyzed from both supply-side and demand-side perspectives. In the first essay, in order to improve the efficiency of the central bank's currency network in a large country, currency vaults are upgraded by expanding their capacities, and the sourcing of the updated currency network is optimized. This is the first study that analyzes a country's overall currency network's operations from the supply-side perspective. In the same domain, the second essay presents general models for analyzing the operational issues in the U.S. Coin Supply Chain. As the first study to view the U.S. Coin Supply Chain as a closed-loop/reverse supply chain, it investigates the supply chain from both supply-side and demand-side perspectives to increase efficiency and effectiveness in ordering, producing, packaging, distributing and managing inventory of coins. This essay provides efficient methods and guidelines for effectively managing the supply chain that can be implemented in practice. Belonging to the second domain, the third essay optimizes a food supply chain to assure food safety and provides suggestions to government agencies and private companies concerning where to locate new irradiation facilities with appropriate capacities strategically, how to source the demand of U.S. hubs from the supply of Mexican growing regions through irradiation facilities tactically, and how to efficiently transport fresh fruits imported from Mexico to the U.S. operationally

An Analysis of Coordination Mechanisms for the U.S. Cash Supply Chain

The overuse of its currency processing facilities by depository institutions (DIs) has motivated the Federal Reserve (Fed) to impose its new cash recirculation policy. This overuse is characterized by the practice of cross-shipping, where a DI both deposits and withdraws cash of the same denomination in the same business week in the same geographical area. Under the new policy, which came into effect July 2007, the Fed has imposed a recirculation fee on cross-shipped cash. The Fed intends to use this fee to induce DIs to effectively recirculate cash so that the societal cost of providing cash to the public is lowered. To examine the efficacy of this mechanism, we first characterize the social optimum and then analyze the response of DIs under a recirculation fee levied on cross-shipped cash. We show that neither a linear recirculation fee, which is the Fed's current practice, nor a more sophisticated nonlinear fee is sufficient to guarantee a socially optimal response from DIs. We then derive a fundamentally different mechanism that induces DIs to self-select the social optimum. Our mechanism incorporates a fairness adjustment that avoids penalizing DIs that recirculate their fair share of cash and rewards DIs that recirculate more than this amount. We demonstrate that the mechanism is easy to implement and tolerates a reasonable amount of imprecision in the problem parameters. We also discuss a concept of welfare-preserving redistribution wherein the Fed allows a group of DIs to reallocate (amongst themselves) their deposits and demand if such a possibility does not increase societal cost. Finally, we analyze the impact of incorporating the custodial inventory program, another component of the Fed's new policy.cash supply chain, coordination, fit sorting, cross shipping