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

Reliability-based economic model predictive control for generalized flow-based networks including actuators' health-aware capabilities

This paper proposes a reliability-based economic model predictive control (MPC) strategy for the management of generalized flow-based networks, integrating some ideas on network service reliability, dynamic safety stock planning, and degradation of equipment health. The proposed strategy is based on a single-layer economic optimisation problem with dynamic constraints, which includes two enhancements with respect to existing approaches. The first enhancement considers chance-constraint programming to compute an optimal inventory replenishment policy based on a desired risk acceptability level, leading to dynamically allocate safety stocks in flow-based networks to satisfy non-stationary flow demands. The second enhancement computes a smart distribution of the control effort and maximises actuators’ availability by estimating their degradation and reliability. The proposed approach is illustrated with an application of water transport networks using the Barcelona network as the considered case study.Peer ReviewedPostprint (author's final draft

Logistics issues of biomass : the storage problem and the multi-biomass supply chain

Biomass is a renewable energy source with increasing importance. The larger fraction of cost in biomass energy generation originates from the logistics operations. A major issue concerning biomass logistics is its storage, especially when it is characterized by seasonal availability. The biomass energy exploitation literature has rarely investigated the issue of biomass storage. Rather, researchers usually choose arbitrarily the lowest cost storage method available, ignoring the effects this choice may have on the total system efficiency. In this work, the three most frequently used biomass storage methods are analyzed and are applied to a case study to come up with tangible comparative results. Furthermore, the issue of combining multiple biomass supply chains, aiming at reducing the storage space requirements, is introduced. An application of this innovative concept is also performed for the case study examined. The most important results of the case study are that the lowest cost storage method indeed constitutes the system-wide most efficient solution, and that the multi-biomass approach is more advantageous when combined with relatively expensive storage methods. However, low cost biomass storage methods bear increased health, safety and technological risks that should always be taken into account. (C) 2008 Elsevier Ltd. All rights reserved

On multi-stage production/inventory systems under stochastic demand

This paper was presented at the 1992 Conference of the International Society of Inventory Research in Budapest, as a tribute to professor Andrew C. Clark for his inspiring work on multi-echelon inventory models both in theory and practice. It reviews and extends the work of the authors on periodic review serial and convergent multi-echelon systems under stochastic stationary demand. In particular, we highlight the structure of echelon cost functions which play a central role in the derivation of the decomposition results and the optimality of base stock policies. The resulting optimal base stock policy is then compared with an MRP system in terms of cost effectiveness, given a predefined target customer service level. Another extension concerns an at first glance rather different problem; it is shown that the problem of setting safety leadtimes in a multi-stage production-to-order system with stochastic lead times leads to similar decomposition structures as those derived for multi-stage inventory systems. Finally, a discussion on possible extensions to capacitated models, models with uncertainty in both demand and production lead time as well as models with an aborescent structure concludes the paper

Finite-horizon operations planning for a lean supply chain system

This dissertation studies an operational policy for a lean supply chain system consisting of a manufacturer, multiple suppliers and multiple buyers. The manufacturer procures raw materials from the suppliers and converts them into finished products, which are then shipped in batches to the buyers at certain intervals of times. Three distinct but inseparable problems are addressed: single supplier and single buyer with fixed delivery size (FD), multiple suppliers and multiple buyers with individual delivery schedule (MD), and time dependent delivery quantity with trend demand (TD). The mathematical formulations of these supply systems are categorized as mixed-integer, nonlinear programming problems (MINLAP) with discrete, non-convex objective functions and constraints. The operations policy determines the number of orders of raw material, beginning and ending times of cycles, production batch size, production start time, and beginning and ending inventories. The goal is to minimize the cost of the two-stage, just-in-time inventory system that integrates raw materials ordering and finished goods production system. The policy is designed for a finite planning horizon with various phases of life cycle demands such as inception (increasing), maturity (level) and phasing out (declining). Analytical results that characterize the exact, optimal policy for the problems described above are devised to develop efficient and optimal computational procedures. A closed-form heuristic that provides a near-optimal solution and tight lower bound is proposed for the problem FD. A network model to represent the problems is proposed and network-based algorithms are implemented to solve the problems FD, MD and TD optimally. The computational complexities of the algorithms are Θ(N2) or O(N3) where N is the total number of shipments in the planning horizon. Numerical tests to assess the robustness and quality of the methods show that the present research provides superior results. Production and supply chain management play an important role in ensuring that the necessary amounts of materials and parts arrive at the appropriate time and place. A manager, using the models obtained in this research, can quickly respond to consumers\u27 demand by effectively determining the right policies to order raw materials, to deliver finished goods, and to efficiently manage their production schedule

An enhanced approximation mathematical model inventorying items in a multi-echelon system under a continuous review policy with probabilistic demand and lead-time

An inventory system attempts to balance between overstock and understock to reduce the total cost and achieve customer demand in a timely manner. The inventory system is like a hidden entity in a supply chain, where a large complete network synchronizes a series of interrelated processes for a manufacturer, in order to transform raw materials into final products and distribute them to customers. The optimality of inventory and allocation policies in a supply chain for a cement industry is still unknown for many types of multi-echelon inventory systems. In multi-echelon networks, complexity exists when the inventory issues appear in multiple tiers and whose performances are significantly affected by the demand and lead-time. Hence, the objective of this research is to develop an enhanced approximation mathematical model in a multi-echelon inventory system under a continuous review policy subject to probabilistic demand and lead-time. The probability distribution function of demand during lead-time is established by developing a new Simulation Model of Demand During Lead-Time (SMDDL) using simulation procedures. The model is able to forecast future demand and demand during lead-time. The obtained demand during lead-time is used to develop a Serial Multi-echelon Inventory (SMEI) model by deriving the inventory cost function to compute performance measures of the cement inventory system. Based on the performance measures, a modified distribution multi-echelon inventory (DMEI) model with the First Come First Serve (FCFS) rule (DMEI-FCFS) is derived to determine the best expected waiting time and expected number of retailers in the system based on a mean arrival rate and a mean service rate. This research established five new distribution functions for the demand during lead-time. The distribution functions improve the performance measures, which contribute in reducing the expected waiting time in the system. Overall, the approximation model provides accurate time span to overcome shortage of cement inventory, which in turn fulfil customer satisfaction

Three-echelon supply chain delivery policy with trade credit consideration

In recent years, collaboration in supply chain approach widely discussed in the literature; but most have dealt with the two-echelon systems. This study focuses on the just-in-time delivery policy of three-echelon supply chain by collaborative approach, where any of the information from the supply chain is available to all the subsystems involved; manufacturer, distribution center and retailer. In the first part of the study a simple model has been developed for a three-echelon supply system that consists of a single manufacturer, a single distribution center and a single retailer. The other part of the study extends this model by considering a upstream integrated delivery supply chain system consisting of a single manufacturer, multiple distribution centers and multiple retailers. In both cases the retailer enjoys a permissible delay in payment. The joint annual cost of the supply chain is obtained by summing the annual relevant costs at all the subsystems. Using the convex property of the cost function, the optimum values of the decision values are initially obtained that minimizes the total cost. Then, these values are adjusted according to feasibility criteria of the credit conditions and other constraints using an algorithm. A numerical example illustrating the solution reveals that total supply chain cost is less by the presented collaborative approach compared to typical delivery policy. A sensitivity analysis also showed the robustness of the new model. This model considers lot-splitting and deferred payment simultaneously. That has not been studied for three-echelon system before. Future extension of this study involves assumption of random demand with cross-transfer delivery, unequal cycle time, shortage consideration, etc

An integrated shipment planning and storage capacity decision under uncertainty: a simulation study

Purpose – In transportation and distribution systems, the shipment decisions, fleet capacity, and storage capacity are interrelated in a complex way, especially when the authors take into account uncertainty of the demand rate and shipment lead time. While shipment planning is tactical or operational in nature, increasing storage capacity often requires top management’s authority. The purpose of this paper is to present a new method to integrate both operational and strategic decision parameters, namely shipment planning and storage capacity decision under uncertainty. The ultimate goal is to provide a near optimal solution that leads to a striking balance between the total logistics costs and product availability, critical in maritime logistics of bulk shipment of commodity items. Design/methodology/approach – The authors use simulation as research method. The authors develop a simulation model to investigate the effects of various factors on costs and service levels of a distribution system. The model mimics the transportation and distribution problems of bulk cement in a major cement company in Indonesia consisting of a silo at the port of origin, two silos at two ports of destination, and a number of ships that transport the bulk cement. The authors develop a number of “what-if” scenarios by varying the storage capacity at the port of origin as well as at the ports of destinations, number of ships operated, operating hours of ports, and dispatching rules for the ships. Each scenario is evaluated in terms of costs and service level. A full factorial experiment has been conducted and analysis of variance has been used to analyze the results. Findings – The results suggest that the number of ships deployed, silo capacity, working hours of ports, and the dispatching rules of ships significantly affect both total costs and service level. Interestingly, operating fewer ships enables the company to achieve almost the same service level and gaining substantial cost savings if constraints in other part of the system are alleviated, i.e., storage capacities and working hours of ports are extended. Practical implications – Cost is a competitive factor for bulk items like cement, and thus the proposed scenarios could be implemented by the company to substantially reduce the transportation and distribution costs. Alleviating storage capacity constraint is obviously an idea that needs to be considered when optimizing shipment planning alone could not give significant improvements. Originality/value – Existing research has so far focussed on the optimization of shipment planning/scheduling, and considers shipment planning/scheduling as the objective function while treating the storage capacity as constraints. The simulation model enables “what-if” analyses to be performed and has overcome the difficulties and impracticalities of analytical methods especially when the system incorporates stochastic variables exhibited in the case example. The use of efficient frontier analysis for analyzing the simulation results is a novel idea which has been proven to be effective in screening non-dominated solutions. This has provided the authors with near optimal solutions to trade-off logistics costs and service levels (availability), with minimal experimentation times