The boomerang returns? Accounting for the impact of uncertainties on the dynamics of remanufacturing systems

Recent years have witnessed companies abandon traditional open-loop supply chain structures in favour of closed-loop variants, in a bid to mitigate environmental impacts and exploit economic opportunities. Central to the closed-loop paradigm is remanufacturing: the restoration of used products to useful life. While this operational model has huge potential to extend product life-cycles, the collection and recovery processes diminish the effectiveness of existing control mechanisms for open-loop systems. We systematically review the literature in the field of closed-loop supply chain dynamics, which explores the time-varying interactions of material and information flows in the different elements of remanufacturing supply chains. We supplement this with further reviews of what we call the three ‘pillars’ of such systems, i.e. forecasting, collection, and inventory and production control. This provides us with an interdisciplinary lens to investigate how a ‘boomerang’ effect (i.e. sale, consumption, and return processes) impacts on the behaviour of the closed-loop system and to understand how it can be controlled. To facilitate this, we contrast closed-loop supply chain dynamics research to the well-developed research in each pillar; explore how different disciplines have accommodated the supply, process, demand, and control uncertainties; and provide insights for future research on the dynamics of remanufacturing systems

The Value of RFID Technology Enabled Information to Manage Perishables

We address the value of RFID technology enabled information to manage perishables in the context of a supplier that sells a random lifetime product subject to stochastic demand and lost sales. The product's lifetime is largely determined by the time and temperature history in the supply chain. We compare two information cases to a Base case in which the product's time and temperature history is unknown and therefore its shelf life is uncertain. In the first information case, the time and temperature history is known and therefore the remaining shelf life is also known at the time of receipt. The second information case builds on the first case such that the supplier now has visibility up the supply chain to know the remaining shelf life of inventory available for replenishment. We formulate these three different cases as Markov decision processes, introduce well performing heuristics of more practical relevance, and evaluate the value of information through an extensive simulation using representative, real world supply chain parameters.simulation;value of information;RFID;perishable inventory

Coordination mechanisms for inventory control in three-echelon serial and distribution systems

This paper is concerned with the coordination of inventory control in three-echelon serial and distribution systems under decentralized control. All installations in these supply chains track echelon inventories. Under decentralized control the installations will decide upon base stock levels that minimize their own inventory costs. In general these levels do not coincide with the optimal base stock levels in the global optimum of the chain under centralized control. Hence, the total cost under decentralized control is larger than under centralized control. \ud To remove this cost inefficiency, two simple coordination mechanisms are presented: one for serial systems and one for distribution systems. Both mechanisms are initiated by the most downstream installation(s). The upstream installation increases its base stock level while the downstream installation compensates the upstream one for the increase of costs and provides it with a part of its gain from coordination. It is shown that both coordination mechanisms result in the global optimum of the chain being the unique Nash equilibrium of the corresponding strategic game. Furthermore, all installations agree upon the use of these mechanisms because they result in lower costs per installation. The practical implementation of these mechanisms is discussed

Benefits of retailer-supplier partnership initiatives under time-varying demand:a comparative analytical study

This paper aims to help supply chain managers to determine the value of retailer-supplier partnership initiatives beyond information sharing (IS) according to their specific business environment under time-varying demand conditions. For this purpose, we use integer linear programming models to quantify the benefits that can be accrued by a retailer, a supplier and system as a whole from shift in inventory ownership and shift in decision-making power with that of IS. The results of a detailed numerical study pertaining to static time horizon reveal that the shift in inventory ownership provides system-wide cost benefits in specific settings. Particularly, when it induces the retailer to order larger quantities and the supplier also prefers such orders due to significantly high setup and shipment costs. We observe that the relative benefits of shift in decision-making power are always higher than the shift in inventory ownership under all the conditions. The value of the shift in decision-making power is greater than IS particularly when the variability of underlying demand is low and time-dependent variation in production cost is high. However, when the shipment cost is negligible and order issuing efficiency of the supplier is low, the cost benefits of shift in decision-making power beyond IS are not significant

The value of coordination in a two echelon supply chain: Sharing information, policies and parameters.

We study a coordination scheme in a two echelon supply chain. It involves sharing details of replenishment rules, lead-times, demand patterns and tuning the replenishment rules to exploit the supply chain's cost structure. We examine four different coordination strategies; naïve operation, local optimisation, global optimisation and altruistic behaviour on behalf of the retailer. We assume the retailer and the manufacturer use the Order-Up-To policy to determine replenishment orders and end consumers demand is a stationary i.i.d. random variable. We derive the variance of the retailer's order rate and inventory levels and the variance of the manufacturer's order rate and inventory levels. We initially assume that costs in the supply chain are directly proportional to these variances (and later the standard deviations) and investigate the options available to the supply chain members for minimising costs. Our results show that if the retailer takes responsibility for supply chain cost reduction and acts altruistically by dampening his order variability, then the performance enhancement is robust to both the actual costs in the supply chain and to a naïve or uncooperative manufacturer. Superior performance is achievable if firms coordinate their actions and if they find ways to re-allocate the supply chain gain.Bullwhip; Global optimisation; Inventory variance; Local optimisation; Supply chains; Studies; Coordination; Supply chain; IT; Replenishment rule; Rules; Demand; Patterns; Cost; Structure; Strategy; Retailer; Policy; Order; Variance; Inventory; Costs; Options; Variability; Performance; Performance enhancement; Firms;

The impact of freight transport capacity limitations on supply chain dynamics

We investigate how capacity limitations in the transportation system affect the dynamic behaviour of supply chains. We are interested in the more recently defined, 'backlash' effect. Using a system dynamics simulation approach, we replicate the well-known Beer Game supply chain for different transport capacity management scenarios. The results indicate that transport capacity limitations negatively impact on inventory and backlog costs, although there is a positive impact on the 'backlash' effect. We show that it is possible for both backlog and inventory to simultaneous occur, a situation which does not arise with the uncapacitated scenario. A vertical collaborative approach to transport provision is able to overcome such a trade-off. © 2013 Taylor & Francis

Time bucket size and lot-splitting approach

We address the problem of lot splitting for various time bucket lengths in MRP systems. Two approaches for lot splitting can be applied: either use the same (equal) or a variable number of subbatches. Equal subbatching strategies have logistical and computational advantages. Literature states that variable batching strategies are only marginal better. However, these results do not take into account the sensitivity for changes in time bucket length. Managers have reduced time bucket lengths in planning systems. We examine the sensitivity of lot splitting for these changes. Our study reveals that it is not cost-effective to disregard time bucket length when deciding on the number of subbatches. Using the same number of subbatches per time bucket for all products results in substantial cost-differences, where the magnitude is affected by the discontinuity of the total cost curve. For a given time bucket length, a cost difference with a variable number of subbatches per operation of only 2.1% can be obtained if an appropriate, equal number of subbatches for each product can be found. Other equal subbatching strategies show much larger cost differences on average, ranging from 4-11%. In order to obtain these results, a new variable subbatch heuristic has been designed.

The order-up-to policy "sweet spot": using proportional controllers to eliminate the bullwhip problem

We develop a discrete control theory model of a stochastic demand pattern with both Auto Regressive and Moving Average (ARMA) components. We show that the bullwhip effect arises when the myopic Order-Up-To (OUT) policy is used. This policy is optimal when the ordering cost is linear. We then derive a set of z-transform transfer functions of a modified policy that allows us to avoid the bullwhip problem by incorporating a proportional controller into the inventory position feedback loop. With this technique, the order variation can be reduced to the same level as the demand variation. However, bullwhip-effect avoidance in our policy always comes at the costs of holding extra inventory. When the ordering cost is piece -wise linear and increasing, we compare the total cost per period under the two types of ordering policies: with and without bullwhip - effect reduction. Numerical examples reveal that the cost saving can be substantial if order variance is reduced using the proportional controller