Managing Supply Networks in Regulated Markets: three essays using simulation

We present a comprehensive overview of three research topics related to supply chain management. The first essay investigates the impact of a complexity reduction project conducted in the life science industry to improve financial performance. The essay presents the complex infrastructure of antibody manufacturing, distribution and the benefits of applying discrete event simulation to reduce complexity. The digital twin model allows us to evaluate multiple scenarios to support decision-making when redesigning a supply chain. Based on our analysis, we identify significant improvements. The second essay explores how supply chain risks can be identified in a dense supply network to mitigate the impact of disruptions. We developed a novel approach to help companies identify critical nodes in their supply network and apply risk mitigation strategies to reduce risk across the network. Our research shows that the combination of Social Network Analysis (SNA), network graph visualisation, and Monte Carlo Simulation (MCS) improves the ability of decision makers to identify and manage risks. Optimal inventory policies are crucial to supply chain management, especially when dealing with stochastic demand and lead time. The third essay explores the optimal inventory policies under these conditions. First, the fundamental concepts and models of inventory management and policies are discussed. The essay then delves into the complexities of managing inventory with stochastic demand and lead time, exploring four optimal inventory policies to minimise total inventory costs utilising a simulation optimisation approach. The essay concludes with a sensitivity analysis, and we present the four optimal inventory policies for different service levels

A Continuous Review Inventory System with Lost Sales and Emergency Orders

We analyze a continuous review lost sales inventory system with two types of orders—regular and emergency. The regular order has a stochastic lead time and is placed with the cheapest acceptable supplier. The emergency order has a deterministic lead time is placed with a local supplier who has a higher price. The emergency order is not always filled since the supplier may not have the ability to provide the order on an emergency basis at all times. This emergency order has a higher cost per item and has a known probability of being filled. The total costs for this system are compared to a system without emergency placement of orders. This paper provides managers with a tool to assess when dual sourcing is cost optimal by comparing the single sourcing and dual sourcing models

Optimal expediting decisions in a continuous-stage serial supply chain

In this paper, we analyze expediting decisions in a continuous-time, continuous-stage serial supply chain facing a Poisson demand process. For each unit in the chain, one must decide at which speed it should be moved downstream, given the state of the system, so as to minimize total supply chain costs. We decompose the problem into a set of one-dimensional subproblems that can be easily solved and characterize the optimal expediting policy: under quite general assumptions, the optimal speed of a given unit accelerates upstream, and then slows down downstream. We finally provide a case study where we estimate the benefits of expediting compared to a fixed transportation speed and show them to be significant.lead-time management; optimal control; unit-tracking decomposition;

Last Planner and Critical Chain in Construction Management: Comparative Analysis

This paper endeavours to compare the Last Planner System of production control and the Critical Chain production management method. This comparison is carried out in the context of construction management. The original prescription and the evolution of the practice are examined regarding both approaches, and the similarities and differences are noted. Based on these considerations, gaps in the two approaches are identified and the potential of a synthesis of them is explored

Optimal and heuristic repairable stocking and expediting in a fluctuating demand environment

We consider a single stock point for a repairable item. The repairable item is a critical component that is used in a fleet of technical systems such as trains, planes or manufacturing equipment. A number of spare repairables is purchased at the same time as the technical systems they support. Demand for those items is a Markov modulated Poisson process of which the underlying Markov process can be observed. Backorders occur when demand for a ready-for-use item cannot be fulfilled immediately. Since backorders render a system unavailable for use, there is a penalty per backorder per unit time. Upon failure, defective items are sent to a repair shop that offers the possibility of expediting repair. Expedited repairs have shorter lead times than regular repairs but are also more costly. For this system, two important decisions have to be taken: How many spare repairables to purchase initially and when to expedite repairs. We formulate the decision to use regular or expedited repair as a Markov decision process and characterize the optimal repair expediting policy for the infinite horizon average and discounted cost criteria. We find that the optimal policy may take two forms. The first form is to never expedite repair. The second form is a type of threshold policy. We provide necessary and sufficient closed-form conditions that determine what form is optimal. We also propose a heuristic repair expediting policy which we call the world driven threshold (WDT) policy. This policy is optimal in special cases and shares essential characteristics with the optimal policy otherwise. Because of its simpler structure, the WDT policy is fit for use in practice. We show how to compute optimal repairable stocking decisions in combination with either the optimal or a good WDT expediting policy. In a numerical study, we show that the WDT heuristic performs very close to optimal with an optimality gap below 0.76% for all instances in our test bed. We also compare it to more naive heuristics that do not explicitly use information regarding demand fluctuations and find that the WDT heuristic outperforms these naive heuristics by 11.85% on average and as much as 63.67% in some cases. This shows there is great value in leveraging knowledge about demand fluctuations in making repair expediting decisions

Now or Later: A Simple Policy for Effective Dual Sourcing in Capacitated Systems

We examine a possibly capacitated, periodically reviewed, single-stage inventory system where replenishment can be obtained either through a regular fixed lead time channel, or, for a premium, via a channel with a smaller fixed lead time. We consider the case when the unsatisfied demands are backordered over an infinite horizon, introducing the easily implementable, yet informationally rich dual-index policy. We show very general separability results for the optimal parameter values, providing a simulation-based optimization procedure that exploits these separability properties to calculate the optimal inventory parameters within seconds. We explore the performance of the dual-index policy under stationary demands as well as capacitated production environments, demonstrating when the dual-sourcing option is most valuable. We find that the optimal dual-index policy mimics the behavior of the complex, globally optimal state-dependent policy found via dynamic programming: the dual-index policy is nearly optimal (within 1% or 2%) for the majority of cases, and significantly outperforms single sourcing (up to 50% better). Our results on optimal dual-index parameters are generic, extending to a variety of complex and realistic scenarios such as nonstationary demand, random yields, demand spikes, and supply disruptions

Spare parts planning and control for maintenance operations

This paper presents a framework for planning and control of the spare parts supply chain inorganizations that use and maintain high-value capital assets. Decisions in the framework aredecomposed hierarchically and interfaces are described. We provide relevant literature to aiddecision making and identify open research topics. The framework can be used to increasethe e¿ciency, consistency and sustainability of decisions on how to plan and control a spareparts supply chain. This point is illustrated by applying it in a case-study. Applicability of theframework in di¿erent environments is also investigated

Production planning and control: an investigation

The objective of this research is to identify how production planning and control theory may be successfully applied in a practical situation. The thesis is presented in two distinct parts: Part 1 representing a survey of literature concerned with theory and research findings on production planning and control; part 2 focuses on the development of selected material from the literature survey and the application of the product to an actual industrial situation where the appropriateness is tested. [Continues.

A collaborative framework in outbound logistics for the us automakers

The competitive landscape of the U.S. automotive market has transformed from the traditional Big Three players to too many viable players. In 2008-2009, the harsh market conditions, excess production capacity, capital asset redundancies, and many inefficient strategies submerged as the roadblocks for the US automakers to stay competitive and profitable in the North American market. In this new competitive era, cross-company collaboration in product development, standardizing and communizing supply base, sharing flexible manufacturing platforms, using common inbound and out bound logistics service providers and warehousing etc. can play vital roles for the US automakers to reduce overall cost and return to profitability. Through the horizontal collaboration in the outbound logistics operations, these companies can create close-knit business partnership and act faster than the foreign rivals in delivering finished vehicles at the optimum cost. The optimization of outbound logistics operations through consolidation and collaboration among OEMs has tremendous potential to contribute to the profitability by lowering the cost of transportation, in-house inventory, transportation time, and facility costs. The collaboration in the intra- and inter-OEM outbound logistics operations is a critical area that the US automakers need to pay attention and prioritize in their cost reduction initiatives. This research presents an integrated collaboration framework for the outbound logistics operations of the US automakers. In our framework, we propose three potential levels for the US automakers to form outbound logistics collaboration: operational, tactical, and strategic. Our research proposition is to improve the performance of outbound logistics systems of automotive OEMs by means of horizontal collaboration between plants and competing OEMs. The proposed research thus relates to the literature on logistics system design and management and horizontal collaboration in supply chain management. The collaboration framework is demonstrated through a real world case study in US automotive industry. The contribution of this research is the introduction of a framework for intra- and inter-OEM collaboration and the development of novel logistics network design and flow models integrated with inventory models, lost sales, and expedited shipment. Besides the contribution to the academic literature, the proposed collaborative distribution system is a new concept in the automotive industry. Hence, this novel research work will also benefit to the practitioners. Keywords: Operational Collaboration, Tactical Collaboration, Strategic Collaboration, Frequency based Inventory, Customer Patience and Lost Sales, Expedited Shipments