Designing a supply network for a startup company

Thesis (M. Eng. in Logistics)--Massachusetts Institute of Technology, Engineering Systems Division, 2010.Cataloged from student submitted PDF version of thesis.Includes bibliographical references (p. 86-88).Our thesis introduces a supply chain framework catered for startup companies. Startup companies face unique circumstances such as constraints on financial and human resources, and greater uncertainty in demand. From our work with XL Hybrids, a startup company that hybridizes aftermarket vehicles, as well as interviews and literature review, we have attempted to distill supply chain strategies that can be applied to startup companies. To plan XL Hybrids' supply chain, we developed models for the following aspects of their supply chain: production scheduling, capacity planning, inventory policy, and component distribution. By running different demand and pricing scenarios, we gained an understanding of the impact of these variables on the four aspects of XL Hybrid's supply chain. Based on the scenario analysis and supply chain framework that we developed, we recommend that XL Hybrids be conservative with capacity expansion while strategically sourcing key components after considering volume discounts and different distribution methods.by Marcus S. Causton and Jianmin Wu.M.Eng.in Logistic

On-demand last-mile distribution network design with omnichannel inventory

E-commerce delivery deadlines are getting increasingly tight, driven by a growing ‘I-want-it-now’ instant gratification mindset of consumers and the desire of online and omnichannel retailers to capitalize on the growth of on-demand e-commerce. On-demand deliveries with delivery deadlines as tight as one or two hours force companies to rethink their last-mile distribution network, since tight delivery deadlines require decentralization of order picking and inventory holding to ensure close proximity to consumers. This fundamentally changes the strategic design process of last-mile distribution networks. We study the impact of incorporating inventory order-up-to level decisions into the strategic design process of last-mile distribution networks with tight delivery deadlines. We develop an approximate inventory model by including an estimate of the cost of late delivery and additional transportation due to local stock-outs in a newsvendor formulation. Such local stock-outs require an order to be delivered from a more distant facility, which may lead to late delivery and additional transportation cost. We integrate our approximate inventory model and a location-allocation mixed-integer program that determines optimal facility locations, associated order-up-to inventory levels, and fleet composition, into a metamodel simulation-based optimization approach. Our numerical analyses demonstrate that pooling the additional online inventory with brick-and-mortar (B&M) inventories leads to cannibalization by the B&M network and higher B&M service levels. However, the pooling benefits to the online network outweigh the cost of inventory cannibalization. Furthermore, we show under which circumstances omnichannel retailers may have an incentive to consolidate online inventory in specific B&M facilities

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

Competitiveness of Arabian gulf ports from shipping lines’ perspectives: Case of Sohar port in Oman

Purpose: The purpose of this article is to investigate the factors that encourage shipping lines to use port of Sohar, in Oman. Some selected factors were used to assess to what extent it affects the port choice from shipping lines companies’ perspective. These factors include infrastructure, hinterland, connectivity and port’s dues. Design/methodology/approach: for this study both quantitative and qualitative methodologies were used. Self-administered questionnaire used for collecting quantitative data while interviews were used to collect qualitative data. Secondary data was collected by reviewing academic literature and recent relevant articles and reports. Findings: Port of Sohar has a better opportunity to be the gateway of the Gulf Cooperation Council (GCC) States and all Cargo could have dropped in the port and transferred to other GCC States by road, rail and other transportation modes. This opportunity is gained by the strategic location of Sohar Port outside of the Strait of Hormuz. It can be concluded that port competitiveness can be improved through strategic location, improved hinterland conditions, port facilities, services cost, volume of cargo, connectivity to other ports and dwell time factor. Research limitations: The research was limited mainly by conducting it only at the port of Sohar because surrounding ports are too far away and it should involve more ports to gain comparative results. Limited number of stakeholders as Port Authority, Oman International Container Terminal (OICT) and shipping lines companies and agents is another limitation. Practical implications: The port can improve its competitive advantages and focus on the investigated factors. The government can also continue in working in the three big infrastructural projects; the new express roads, Sohar Airport and rail network connections with other GCC networks. Originality/value: the study used specific factors that expected to contribute to the shipping lines companies’ selection of ports in the gulf region. This could help the port to identify their competitive advantage and how they can use these competencies to improve their competitiveness in relation to other ports in the region.Peer Reviewe

Simulation and optimization of a multi-agent system on physical internet enabled interconnected urban logistics.

An urban logistics system is composed of multiple agents, e.g., shippers, carriers, and distribution centers, etc., and multi-modal networks. The structure of Physical Internet (PI) transportation network is different from current logistics practices, and simulation can effectively model a series of PI-approach scenarios. In addition to the baseline model, three more scenarios are enacted based on different characteristics: shared trucks, shared hubs, and shared flows with other less-than-truckload shipments passing through the urban area. Five performance measures, i.e., truck distance per container, mean truck time per container, lead time, CO2 emissions, and transport mean fill rate, are included in the proposed procedures using real data in an urban logistics case. The results show that PI enables a significant improvement of urban transportation efficiency and sustainability. Specifically, truck time per container reduces 26 percent from that of the Private Direct scenario. A 42 percent reduction of CO2 emissions is made from the current logistics practice. The fill rate of truckload is increased by almost 33 percent, whereas the relevant longer distance per container and the lead time has been increased by an acceptable range. Next, the dissertation applies an auction mechanism in the PI network. Within the auction-based transportation planning approach, a model is developed to match the requests and the transport services in transport marketplaces and maximize the carriers’ revenue. In such transportation planning under the protocol of PI, it is a critical system design problem for decision makers to understand how various parameters through interactions affect this multi-agent system. This study provides a comprehensive three-layer structure model, i.e. agent-based simulation, auction mechanism, and optimization via simulation. In term of simulation, a multi-agent model simulates a complex PI transportation network in the context of sharing economy. Then, an auction mechanism structure is developed to demonstrate a transport selection scheme. With regard of an optimization via simulation approach and sensitivity analysis, it has been provided with insights on effects of combination of decision variables (i.e. truck number and truck capacity) and parameters settings, where results can be drawn by using a case study in an urban freight transportation network. In the end, conclusions and discussions of the studies have been summarized. Additionally, some relevant areas are required for further elaborate research, e.g., operational research on airport gate assignment problems and the simulation modelling of air cargo transportation networks. Due to the complexity of integration with models, I relegate those for future independent research

Real-time optimization of an integrated production-inventory-distribution problem.

In today\u27s competitive business environment, companies face enormous pressure and must continuously search for ways to design new products, manufacture and distribute them in an efficient and effective fashion. After years of focusing on reduction in production and operation costs, companies are beginning to look into distribution activities as the last frontier for cost reduction. In addition, an increasing number of companies, large and small, are focusing their efforts on their core competencies which are critical to survive. This results in a widespread practice in industry that companies outsource one or more than one logistics functions to third party logistics providers. By using such logistics expertise, they can obtain a competitive advantage both in cost and time efficiency, because the third party logistics companies already have the equipment, system and experience and are ready to help to their best efforts. In this dissertation, we developed an integrated optimization model of production, inventory and distribution with the goal to coordinate important and interrelated decisions related to production schedules, inventory policy and truckload allocation. Because outsourcing logistics functions to third party logistics providers is becoming critical for a company to remain competitive in the market place; we also included an important decision of selecting carriers with finite truckload and drivers for both inbound and outbound shipments in the model. The integrated model is solved by modified Benders decomposition which solves the master problem by a genetic algorithm. Computational results on test problems of various sizes are provided to show the effectiveness of the proposed solution methodology. We also apply this proposed algorithm on a real distribution problem faced by a large national manufacturer and distributor. It shows that such a complex distribution network with 22 plants, 7 distribution centers, 8 customer zones, 9 products, 16 inbound and 16 outbound shipment carriers in a 12-month planning period can be redesigned within 33 hours. In recent years, multi-agent simulation has been a preferred approach to solve logistics and distribution problems, since these problems are autonomous, distributive, complex, heterogeneous and decentralized in nature and they require extensive intelligent decision making. Another important part in this dissertation involved a development of an agent-based simulation model to cooperate with the optimal solution given by the optimization model. More specifically, the solution given by the optimization model can be inputted as the initial condition of the agent-based simulation model. The agent-based simulation model can incorporate many other factors to be considered in the real world, but optimization cannot handle these as needed. The agent-based simulation model can also incorporate some dynamics we may encounter in the real operations, and it can react to these dynamics in real time. Various types of entities in the entire distribution system can be modeled as intelligent agents, such as suppliers, carriers and customers. In order to build the simulation model more realistic, a sealed bid multiunit auction with an introduction of three parameters a, ß and y is well designed. With the help of these three parameters, each agent makes a better decision in a simple and fast manner, which is the key to realizing real-time decision making. After building such a multi-agent system with agent-based simulation approach, it supports more flexible and comprehensive modeling capabilities which are difficult to realize in a general optimization model. The simulation model is tested and validated on an industrial-sized problem. Numerical results of the agent-based simulation model suggest that with appropriate setting of three parameters the model can precisely represent the preference and interest of different decision makers

Collaborative urban transportation : Recent advances in theory and practice

We thank the Leibniz Association for sponsoring the Dagstuhl Seminar 16091, at which the work presented here was initiated. We also thank Leena Suhl for her comments on an early version of this work. Finally, we thank the anonymous reviewers for the constructive comments.Peer reviewedPostprin

Integrated network flow model for a reliability assessment of the national electric energy system

Electric energy availability and price depend not only on the electric generation and transmission facilities, but also on the infrastructure associated to the production, transportation, and storage of coal and natural gas. As the U.S. energy system has grown more complex and interdependent, failure or degradation on the performance of one or more of its components may possibly result in more severe consequences in the overall system performance. The effects of a contingency in one or more facilities may propagate and affect the operation, in terms of availability and energy price, of other facilities in the energy grid. In this dissertation, a novel approach for analyzing the different energy subsystems in an integrated analytical framework is presented, by using a simplified representation of the energy infrastructure structured as an integrated, generalized, multi-period network flow model. The model is capable of simulating the energy system operation in terms of bulk energy movements between the different facilities and prices at different locations under different scenarios. Assessment of reliability and congestion in the grid is performed through the introduction and development of nodal price-based metrics, which prove to be especially valuable for the assessment of conditions related to changes in the capacity of one or more of the facilities. Nodal price-based metrics are developed with the specific objectives of evaluating the impact of disruptions and of assessing capacity expansion projects. These metrics are supported by studying the relationship between nodal prices and congestion using duality theory. Techniques aimed at identifying system vulnerabilities and conditions that may significantly impact availability and price of electrical energy are also developed. The techniques introduced and developed through this work are tested using 2005 data, and special effort is devoted to the modeling and study of the effects of hurricanes Katrina and Rita in the energy system. In summary, this research is a step forward in the direction of an integrated analysis of the electric subsystem and the fossil fuel production and transportation networks, by presenting a set of tools for a more comprehensive assessment of congestion, reliability, and the effects of disruptions in the U.S. energy grid

Supply chain network design models for a circular economy: a review and a case study assessment

Global supply chains are getting increasingly dispersed, and hence, more complex. This has also made them more vulnerable to disruptions and risks. As a result, there is a constant need to reconfigure/redesign them to ensure competitiveness. However, the relevant aspects/facets for doing so are fragmented and scattered across the literature. This study reviews the literature to develop a holistic understanding of the key considerations (environment, cost, efficiency, and risks) in designing/redesigning global supply chains. This understanding is then applied to assess the global supply chain network of a leading multinational tire manufacturing firm; also to provide recommendations on redesigning it. The study has significant practical and research implications for global supply chain management