Sustainable Inventory Management Model for High-Volume Material with Limited Storage Space under Stochastic Demand and Supply

Inventory management and control has become an important management function, which is vital in ensuring the efficiency and profitability of a company’s operations. Hence, several research studies attempted to develop models to be used to minimise the quantities of excess inventory, in order to reduce their associated costs without compromising both operational efficiency and customers’ needs. The Economic Order Quantity (EOQ) model is one of the most used of these models; however, this model has a number of limiting assumptions, which led to the development of a number of extensions for this model to increase its applicability to the modern-day business environment. Therefore, in this research study, a sustainable inventory management model is developed based on the EOQ concept to optimise the ordering and storage of large-volume inventory, which deteriorates over time, with limited storage space, such as steel, under stochastic demand, supply and backorders. Two control systems were developed and tested in this research study in order to select the most robust system: an open-loop system, based on direct control through which five different time series for each stochastic variable were generated, before an attempt to optimise the average profit was conducted; and a closed-loop system, which uses a neural network, depicting the different business and economic conditions associated with the steel manufacturing industry, to generate the optimal control parameters for each week across the entire planning horizon. A sensitivity analysis proved that the closed-loop neural network control system was more accurate in depicting real-life business conditions, and more robust in optimising the inventory management process for a large-volume, deteriorating item. Moreover, due to its advantages over other techniques, a meta-heuristic Particle Swarm Optimisation (PSO) algorithm was used to solve this model. This model is implemented throughout the research in the case of a steel manufacturing factory under different operational and extreme economic scenarios. As a result of the case study, the developed model proved its robustness and accuracy in managing the inventory of such a unique industry

Supply chain inventory control for the iron and steel industry

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Supply chain finance for ameliorating and deteriorating products: a systematic literature review

Ameliorating and deteriorating products, or, more generally, items that change value over time, present a high sensitiveness to the surrounding environment (e.g., temperature, humidity, and light intensity). For this reason, they should be properly stored along the supply chain to guarantee the desired quality to the consumers. Specifically, ameliorating items face an increase in value if there are stored for longer periods, which can lead to higher selling price. At the same time, the costumers’ demand is sensitive to the price (i.e., the higher the selling price the lower the final demand), sensitiveness that is related to the quality of the products (i.e., lower sensitiveness for high-quality products). On the contrary, deteriorating items lose quality and value over time which result in revenue losses due to lost sales or reduced selling price. Since these products need to be properly stored (i.e., usually in temperature- and humidity-controlled warehouses) the holding costs, which comprise also the energy costs, may be particularly relevant impacting on the economic, environmental, and social sustainability of the supply chain. Furthermore, due to the recent economic crisis, companies (especially, small and medium enterprises) face payment difficulties of customers and high volatility of resources prices. This increases the risk of insolvency and on the other hand the financing needs. In this context, supply chain finance emerged as a mean for efficiency by coordinating the financial flow and providing a set of financial schemes aiming at optimizing accounts payable and receivable along the supply chain. The aim of the present study is thus to investigate through a systematic literature review the two main themes presented (i.e., inventory management models for products that change value over time, and financial techniques and strategies to support companies in inventory management) to understand if any financial technique has been studied for supporting the management of this class of products and to verify the existing literature gap

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

Joint optimization of process improvement investments for supplier-buyer cooperative commerce

This research focuses on supporting the formation of strategic alliances through the concept of cooperative commerce, where suppliers and buyers work together to jointly optimize their businesses. The general goal of this research is to examine existing cooperative commerce models for obstacles that would hinder their successful implementation into modern industrial applications and to address those shortcomings. Total annual cost equations are formulated to capture the joint total relevant cost of cooperative commerce business relationships. These total joint relevant cost models will include terms that capture the ordering cost, holding cost, and cost of quality, as well as any applicable investment cost for process improvements, consistent with traditional economic order quantity and economic production quantity theory. This research corrects a modeling error of Affisco, et al. (2002) that led to underestimating the effectiveness of process improvements in joint economic lot size models. In addition, the models are expanded to accommodate a full range of product quality inspection policies, from zero to one hundred percent product inspections. Furthermore, the models are modified to account for the cost of scrap generation, as well as the effects of accepting non-conforming product and rejecting conforming product during quality inspections. Once the total cost models are expanded to account for these neglected costs, the joint total relevant cost equations are minimized to find the optimal batch sizes, and the effects of each model extension on the model solution are studied. Results indicate that these extensions do have a significant impact on the model results, such as reduced optimal batch sizes and increased optimal fraction conforming product

Overview and classification of coordination contracts within forward and reverse supply chains

Among coordination mechanisms, contracts are valuable tools used in both theory and practice to coordinate various supply chains. The focus of this paper is to present an overview of contracts and a classification of coordination contracts and contracting literature in the form of classification schemes. The two criteria used for contract classification, as resulted from contracting literature, are transfer payment contractual incentives and inventory risk sharing. The overview classification of the existing literature has as criteria the level of detail used in designing the coordination models with applicability on the forward and reverse supply chains.Coordination contracts; forward supply chain; reverse supply chain

SUSTAINABLE VALUE OF RICE SUPPLY CHAIN: A SYSTEMATIC LITERATURE REVIEW AND RESEARCH AGENDA

The rice supply chain is important to achieve food security. It has various perspectives, challenges or issues that causes a complex problem in supply chain system. The existing problem are related to food availability, inventory level, fragmented distribution, affordability of prices, accessibility, variation of business processes and the environmental impact from production and logistics system. Moreover integration framework in the dimension of sustainability is limited. The objective of this article is to identify current problems to construct the idea of supply chain integration and to build the formulation for improvement the value of rice supply chain. Fifty articles discuss rice supply chain. The remaining discuss on increasing rice productivity, inventory optimization, performance improvement, and traceability. The VOS viewer result showed that sustainability is connected to the supply chain at a distant position which indicates that sustainability has the opportunity to be studied wider range in future research. The gap analysis showed that the production increase is limited to agronomy innovation and didn’t consider sustainable characteristics input. The indirect innovations that use information technology for precision farming also had not been comprehensively collaborated. The production absorption had not been considered in inventory optimization and traceability system had not been developed for supply availability. The improvement activities to fill the gap will transform supply chain performance more efficient, responsive and minimum environmental impacts for the enhancement of the sustainability value of the rice supply chain. Keywords: gap analysis,  integration, rice supply chain, sustainability, production and logistics syste

SUSTAINABLE VALUE OF RICE SUPPLY CHAIN: A SYSTEMATIC LITERATURE REVIEW AND RESEARCH AGENDA

The rice supply chain is important to achieve food security. It has various perspectives, challenges or issues that causes a complex problem in supply chain system. The existing problem are related to food availability, inventory level, fragmented distribution, affordability of prices, accessibility, variation of business processes and the environmental impact from production and logistics system. Moreover integration framework in the dimension of sustainability is limited. The objective of this article is to identify current problems to construct the idea of supply chain integration and to build the formulation for improvement the value of rice supply chain. Fifty articles discuss rice supply chain. The remaining discuss on increasing rice productivity, inventory optimization, performance improvement, and traceability. The VOS viewer result showed that sustainability is connected to the supply chain at a distant position which indicates that sustainability has the opportunity to be studied wider range in future research. The gap analysis showed that the production increase is limited to agronomy innovation and didn’t consider sustainable characteristics input. The indirect innovations that use information technology for precision farming also had not been comprehensively collaborated. The production absorption had not been considered in inventory optimization and traceability system had not been developed for supply availability. The improvement activities to fill the gap will transform supply chain performance more efficient, responsive and minimum environmental impacts for the enhancement of the sustainability value of the rice supply chain. Keywords: gap analysis,  integration, rice supply chain, sustainability, production and logistics syste