Spare parts provisioning for multiple k-out-of-n:G systems

In this paper, we consider a repair shop that fixes failed components from different k-out-of-n:G systems. We assume that each system consists of the same type of component; to increase availability, a certain number of components are stocked as spare parts. We permit a shared inventory serving all systems and/or reserved inventories for each system; we call this a hybrid model. Additionally, we consider two alternative dispatching rules for the repaired component. The destination for a repaired component can be chosen either on a first-come-first-served basis or by following a static priority rule. Our analysis gives the steady-state system size distribution of the two alternative models at the repair shop. We conduct numerical examples minimizing the spare parts held while subjecting the availability of each system to exceed a targeted value. Our findings show that unless the availabilities of systems are close, the HP policy is better than the HF policy

The Impact of Pooling on Throughput Time in Discretionary Work Settings: An Empirical Investigation of Emergency Department Length of Stay

We conduct an empirical investigation on the impact of pooling tasks and resources on throughput times in a discretionary work setting. We use an Emergency Department’s (ED) patient-level data (N = 234,334) from 2007 to 2010 to test our hypotheses. We find that when the ED’s work system had pooled tasks and resources, patients’ lengths of stay were longer than when the ED converted to having dedicated tasks and resources. More specifically, we find that dedicated systems resulted in a 9 percent overall decrease in length of stay, which corresponds to a 25-minute reduction in length of stay for an average patient of medium severity in this ED. We propose that the improved performance comes from a reduction in social loafing and a more distributed utilization of shared resources. These benefits outweigh the expected efficiency gains from pooling, which are commonly predicted by queuing theory

Analysis of a group purchasing organization under demand and price uncertainty

Based on an industrial case study, we present a stochastic model of a supply chain consisting of a set of buyers and suppliers and a group purchasing organization (GPO). The GPO combines orders from buyers in a two-period model. Demand and price in the second period are random. An advance selling opportunity is available to all suppliers and buyers in the first-period market. Buyers decide how much to buy through the GPO in the first period and how much to procure from the market at a lower or higher price in the second period. Suppliers determine the amount of capacity to sell through the GPO in the first period and to hold in reserve in order to meet demand in the second period. The GPO conducts a uniform-price reverse auction to select suppliers and decides on the price that will be offered to buyers to maximize its profit. By determining the optimal decisions of buyers, suppliers, and the GPO, we answer the following questions: Do suppliers and buyers benefit from working with a GPO? How do the uncertainty in demand, the share of GPO orders in the advance sales market, and the uncertainty in price influence the players’ decisions and profits? What are the characteristics of an environment that would encourage suppliers and buyers to work with a GPO? We show that a GPO helps buyers and suppliers to mitigate demand and price risks effectively while collecting a premium by serving as an intermediary between them

Hyperconnected fulfillment and inventory allocation and deployment models

Consumption patterns have been changed dramatically over the past decades, notably by the growth of e-commerce. With the prevalence of e-commerce and home delivery, customer expectations for a faster, punctual, and cheap delivery are increasing. In fact, many customers are expecting for same-day or x-hour deliveries now and offering fast delivery becomes more and more critical for e-retailers to survive in a fierce market competition. However, many companies are simply lacking financial, physical, and/or operational resources to increase their responsiveness. Focusing on solving the challenges in the perspective of fulfillment and inventory, we aim to find a breakthrough from a recently emerging logistics innovation movement induced by the introduction of the Physical Internet (PI). PI can potentially enable responsive yet affordable fulfillment for companies of any size through open asset utilization and multi-player operations. The key of PI innovation is transforming asset-driven logistics operations to service-driven logistics operations. This thesis provides an academic foundation for hyperconnected fulfillment to effectively satisfy the growing customer expectations on responsive deliveries. We first present a comprehensive design and evaluation of a hyperconnected fulfillment system. Then, we focus on providing inventory operations models, inventory allocation and deployment respectively, which maximally utilize the key features of hyperconnected fulfillment system: connectivity, flexibility, and decentralization. In Chapter 2, a hyperconnected fulfillment and delivery system is designed in the context of the last-mile operations in urban areas. A comprehensive system and decision architecture of the hyperconnected system is modeled. We carefully design the scenarios to show a gradual transformation from dedicated to hyperconnected system in each thread of delivery and fulfillment so as to reveal the marginal impact of each step of transformation. We conduct a scenario analysis using a simulation platform built upon the system and decision architecture where autonomous agents are optimizing their decisions and interact with the environment. The experimental results clearly demonstrate the potential benefit of hyperconnected urban fulfillment and delivery system by concurrently improving often opposing performance criteria: economic efficiency, service capability and sustainability. Chapter 3 tackles an optimal inventory allocation problem among multiple sales outlets. Specifically, we analyze a case where a dropshipper allocates availability to multiple e-retailers via availability promising e-contracts (APCs). Under the APC, the e-retailers do not observe actual availability and this information asymmetry leads them to pose a promised availability threshold (PAT). PAT is a threshold on remaining promised availability set by an e-retailer for a product of a dropshipper, below which the e-retailer unlists the product and thus does not accept any more orders from customers, until the promised availability is climbed above the threshold by the dropshipper. The dropshipper's APC problem with PAT is modeled as 2-stage stochastic program with two stochastic parameters: demand and PAT. We design and evaluate three contract policies differentiated by the allowance level for overpromising: guaranteed fulfillment, controlled fillrate, and penalty-driven fillrate policies. We also present a modeling approach to convert the endogenous demands, per-retailer-distribution of which is affected by the APCs, to exogenous demands with linear substitution constraints. The numerical results show the penalty-driven fillrate policy is the dominating strategy for dropshippers especially under a lean availability. Chapter 4 tackles an inventory deployment problem under the context of open asset utilization and responsive fulfillment. When it comes to very responsive deliveries, such as X-hour deliveries, the physical availability of inventories near the delivery locations becomes necessary, which requires a broad and dense fulfillment network. The open asset utilization and service-driven fulfillment operations of the PI can enable affordable access to such decentralized fulfillment network comprised of the open fulfillment centers. We evaluate the benefit of such decentralized fulfillment network for a responsive fulfillment and develop an appropriate inventory deployment model, which possesses a partially pooled demand and inventory structure induced by responsiveness requirements, as a variant of Newsvendor. We derive a pragmatic heuristic inventory solution, W-solution, and present an efficient binary search based solution heuristic, W-heuristic. Then, via numerical experiments over both theoretical and empirical demand distributions, we demonstrate the advantage of decentralized network and w-solution over centralized network and allocation-based inventory model, pre-allocation model, respectively. We also report rather counter-intuitive observations that the w-solution which accounts for pooling leads to more inventory than pre-allocation model which does not account for pooling under low sales margin.Ph.D

Essays on Procurement with Information Asymmetry.

Sourcing, once seen as a tactical function of vertically integrated firms, has today become strategic for firms that now rely on extensive, vertically disintegrated supply chains. Vertical disintegration leads to complex relationships within a supply chain; for example, dependence between firms across different tiers and competition among firms within each tier often coexist. In addition, firms generally harbor private information. The complex relationships and information asymmetry make firms’ interactions highly strategic. How should firms in supply chains of various structures make strategic procurement decisions in the presence of information asymmetry? The three essays in this dissertation study three specific problems on this topic. The essay “Does Pooling Component Demands when Sourcing Lead to Higher Profits?” studies whether pooling purchases for a component used in multiple products with uncertain demands always results in increased profits for the buyer, when the component must be purchased from a sole-source strategic supplier. The essay “Simple Auctions for Supply Contracts” designs a simple and easily implementable optimal procurement mechanism for a newsvendor-like problem, where the buyer’s (newsvendor’s) purchase price is not fixed, but determined through interactions with candidate suppliers who possess private information about their own production costs. Finally, the essay “Price-Quoting Strategies of a Tier-Two Supplier” studies how a tier-two supplier of a crucial component should best quote prices to her tier-one customers, who will compete for an OEM’s indivisible contract based on cost. This dissertation has the potential to help procurement managers understand certain business situations more clearly and make better decisions. In particular, it highlights the impact of information asymmetry on procurement, and suggests strategies to tackle resulting challenges. More broadly, this dissertation adds to the nascent and growing Operations Management scholarship on procurement, and contributes to the field’s general understanding of supply chain management.Ph.D.Business AdministrationUniversity of Michigan, Horace H. Rackham School of Graduate Studieshttps://deepblue.lib.umich.edu/bitstream/2027.42/86363/2/hub_1.pd

Analysis of IV-pump Management Alternatives Using Simulation

The objective of this thesis was to better understand the patterns of IV-pump use throughout the hospital in order to provide guidance to the hospital on alternative pump management methods. In the current system, when the number of available pumps in a department was fewer than the number of pumps required for patient care, the department encountered shortage. In most cases, the personnel were not clear on where available pumps might be stored and had to search for free pumps throughout the hospital. The system was thoroughly studied and the necessary data were collected. A model reflecting the current flow of patients and pumps was developed. This model was operationalized by constructing a simulation model. The model presented the flow through the hospital on a daily basis. The output of the simulation model provided the daily number of pumps in use in each of the departments and the distribution of pump use for each department, separately, and overall. Using these distributions, the number of pumps required in each department if maintaining a supply of pumps was quantified to meet certain service levels. In addition, the number of pumps required in the system if the pumps were all shared, was also obtained. It was concluded that the actual number of pumps required in the system is fewer than the number of pumps existing in the hospital. This conclusion confirmed that long searches for free pumps were not due to insufficient quantity of pumps, but were solely due to the behaviour of hoarding extra pumps when available. The simulation also provided the number of pumps short per day and the number of pumps in excess per day, by department. Two pump management alternatives were suggested to the hospital. The first alternative was to utilize a centralized pool to keep all shared pumps when not in use. The second alternative was to install RFID technology throughout the hospital and equip all pumps with RFID tags so that they could be easily located. The three pump management systems (current, central pooling, and RFID) were compared, and the advantages and disadvantages of each of the alternative techniques were discussed