401 research outputs found

    Inventory redistribution for fashion products under demand parameter update

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    Demand for fashion products is usually highly uncertain. Often, there is only one possibility for procurement before the selling season. In order to improve the traditional newsvendor-type overage-underage trade-off we study a network of two expected profit maximizing retailers selling a fashion product where there is an additional opportunity for redistribution of stock during the selling season. We distinguish between the situation where redistribution is done at the moment when one of the retailers is running out of stock and the situation where the redistribution time is already determined and fixed before the selling season. We model the demand process at a retailer by a Poisson Process with an uncertain mean and use a Bayesian approach to update the distribution parameters before transshipments are done. In a numerical study we compare the different policies and show that timing flexibility and updating are especially beneficial in situations with low profit margins and high parameter uncertainty. Further, we show that depending on the instance, an optimal predetermined transshipment timing depends on the problem parameters and may be between the middle and the end of the selling season

    Two-Stage Methodology for Managing and Controlling Material Flow Between Multiple Construction Projects

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    There is a strong connection between managing and controlling material flow in a supply chain and its performance. While this is true in all supply chains, it is particularly true in the construction supply chain (CSC) where the total demand for parts is finite, the storage space available can be small, and the variability in consumption is high. On the other hand, effectively controlling the CSC can have a significant impact on controlling risk and buffering their impact so that projects stay on schedule and within budget. Currently, a common control of the CSC is with a push-based material ordering system based on the initial construction schedule and, then, holding a tremendous amount of inventory. Project managers even speak of the desirability to \u27flood the site\u27 which means having as many of the construction materials on-site as early in the project as possible. It is not uncommon for a year-long construction project to have tens of acres dedicated to storage and for this area to be completely full early before the project begins. Further, each project is controlled completely independently from all other project even if they are for the same customer or being built by the same firm. A new methodology for controlling the CSC that represents a paradigm shift from the current system is proposed in this Dissertation. This two-stage methodology applies to products that can be used among a few construction projects being executed simultaneously. Stage 1 mirrors the current push procurement strategy but Stage 2 allows transshipments between sites. Further, the two stages collaborate in the sense that information is shared and decisions updated based on current, global knowledge. The methodology uses deterministic optimization models with objectives that minimizing the total cost of the CSC. To illustrate how this methodology can be used in practice and the types of information that can be gleaned, it is tested on a number of cases based on the real example of multiple construction projects in Kuwait

    A Disaster Relief Inventory Model Based on Transshipment

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    This research study is an effort to shed light on how transshipment may help improve the management of inventory in a disaster relief system. System dynamics simulation was used to compare inventory control and costs in a humanitarian supply chain without transshipment vs. one with transshipment. A framework for this approach is given along with the results of simulations on a system consisting of two warehouses where transshipment is allowed compared to the alternative where transshipment is not allowed. The preliminary results of this study indicate that transshipment can reduce costs and improve service to disaster victims based on inventory levels maintained in the warehouses. In some cases, transshipment may be more expensive, but this assumes the cost of replenishing inventory as a result of emergency purchase costs

    Behavioral analyses of retailers’ ordering decisions

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    The main objective I pursue in this thesis is to better understand how different factors may independently and in combination influence retailers' ordering decisions under different supply chain structures (single agent and multi agent), different demand uncertainty (deterministic and stochastic), and different interaction among retailers (no interaction, competition and cooperation). I developed three different studies where I build on different formal management model and then run multiple behavioral studies to better understand subjects’ behavior. The first study analyzes order amplification in a single-supplier single-retailer supply chain. I used a behavioral experiment to test retailers’ orders under different ordering delays and different times to build supplier’s capacity. Results provide (i) a better understanding of the endogenous dynamics leading to retailers’ ordering amplification, and (ii) a description of subjects’ biases and deviation from optimal trajectories; despite subjects have full information about the system structure. The second study analyzes how order amplification can also take place when there is fierce retailer competition and limited supplier capacity. I study how different factors (different time to build supplier capacity, different levels of competition among retailers, different magnitudes of supply shortage and different allocation mechanisms) may independently and in combination influence retailers’ order in a system with two retailers under supply competition. Results show that (i) the bullwhip effect persists even when subjects do not have incentives to deviate, (ii) subjects amplify their orders in an attempt to build an unnecessary safety stock to respond to potential deviations from the other retailers, and (iii) retailers’ underperformance varies with the allocation mechanism used by the supplier. In the last study, I analyze retailers’ orders in a system where there is uncertainty in the final customer demand. I experimentally explore the effect of transshipments among retailers in a single-supplier multi-retailer supply chain. Specifically, I explore retailers’ orders under different profit and communication conditions. In addition, I integrate analytical and behavioral models to improve supply chain performance. Results show that (i) the persistence of common biases in a newsvendor problem (pull-to-center, demand chasing, loss aversion, psychological disutility), (ii) communication could improve coordination and may reduce demand chasing behavior, (iii) supply chain performance increases with the use of behavioral strategies embedded within a traditional optimization model, and (iv) dynamic heuristics improve overall coordination, outperforming a simple Nash Equilibrium strategy

    Essays on Supply Chain Contracting and Retail Pricing.

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    An important operational decision that a seller has to make is how to price his product under different situations. This dissertation addresses three unique pricing problems, commonly faced by a seller in a supply chain, in a series of three essays. The first essay considers a supplier's problem of choosing which type of contracts to offer to a retailer whose demand forecasts can be improved over time. It is shown that there exist mechanisms which enable the supplier to always benefit from the retailer's improved demand forecasts. Such a mechanism consists of an initial contract, offered to the retailer before she obtains improved forecasts, and a later contract (contingent on the initial contract), offered to the retailer after she obtains improved forecasts. The second essay investigates a retailer's problem of choosing which form of price promotions to offer to consumers, some of which are more inclined to increase spending when satisfied with the value of the deals. Two types of promotions are considered: i) all-unit discount, where a price reduction applies to every unit of a purchase that meets the minimum requirement, and ii) fixed-amount discount, where the final amount that a consumer has to pay is reduced by a predetermined discount amount if the purchase meets the minimum requirement. It is shown that both discount schemes can induce consumers to overspend. However, depending on consumer valuation of the product, one scheme can be more profitable to the retailer than the other. The third essay discusses a dual-channel retailer's problem of choosing a price differentiating policy (charging different prices for the same product sold at different channels) and/or inventory transshipping policy (transferring inventory between the channels) to balance available inventory and demand arriving at each channel. It is shown that the two mechanisms have different implications on sales volume. Which mechanism is more effective depends on the retailer's initial inventory position. Furthermore, when implemented concurrently, the benefit from price differentiation and inventory transshipment mechanisms may either substitute or complement each other.PhDBusiness AdministrationUniversity of Michigan, Horace H. Rackham School of Graduate Studieshttp://deepblue.lib.umich.edu/bitstream/2027.42/107233/1/thunyara_1.pd

    Supply Chain

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    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

    Forecasting for intermittent spare parts in single-echelon multi-location and multi-item logistics network: Case KONE Global Spares Supply

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    The objective of this thesis is to test existing forecasting models for intermittence demand SKU's and implement the best forecast model that suits the inventory control policy of the case company. The optimal forecasting model was selected based on the model that produces optimal performance in terms of customer service levels, inventory total cost and inventory value. Intermittence demand type was categorized based on degree of lumpiness, erratic, smooth-intermittence and intermittent types. The quantitative data set comprised of historical demand information from 2010-2012 (36 months period) for sixteen thousand stock keeping units (SKU) in the three central distribution centers of the case company. Algorithms for the different forecasting models was developed using VBA programming in Excel 2007 and simulated against the demand data. Explorative approach was used to gather information regarding new material introduction process, forecasting parameters used in the software package (Servigistics) and how the results of the research can be implemented in the case organization. The result of the analysis shows that traditional forecast accuracy measure is inadequate for selecting best forecast model. Nevertheless, our result shows that no forecast method (Simple Exponential Smoothening (SES), Croston and Modified Croston (SBA) explicitly showed superior performance in all the traditional measures utilized. When stock control measure was utilized Croston showed superior customer service levels of 1% to SES and 1.4% to SBA. The superior customer service levels come with a 1% increase in total cost. The findings of the thesis also suggest the need for amending the outlier management settings in the software system and to customized tracking signal in the forecast review board to enable the prioritization of review reasons in degree of descending order of stock value and tracking signal estimate
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