Approximating the Nonlinear Newsvendor and Single-Item Stochastic Lot-Sizing Problems When Data Is Given by an Oracle

The single-item stochastic lot-sizing problem is to find an inventory replenishment policy in the presence of discrete stochastic demands under periodic review and finite time horizon. A closely related problem is the single-period newsvendor model. It is well known that the newsvendor problem admits a closed formula for the optimal order quantity whenever the revenue and salvage values are linear increasing functions and the procurement (ordering) cost is fixed plus linear. The optimal policy for the single-item lot-sizing model is also well known under similar assumptions. In this paper we show that the classical (single-period) newsvendor model with fixed plus linear ordering cost cannot be approximated to any degree of accuracy when either the demand distribution or the cost functions are given by an oracle. We provide a fully polynomial time approximation scheme for the nonlinear single-item stochastic lot-sizing problem, when demand distribution is given by an oracle, procurement costs are provided as nondecreasing oracles, holding/backlogging/disposal costs are linear, and lead time is positive. Similar results exist for the nonlinear newsvendor problem. These approximation schemes are designed by extending the technique of K-approximation sets and functions.National Science Foundation (U.S.) (Contract CMMI-0758069)United States. Office of Naval Research (Grant N000141110056

Supply chain management resources, capabilities and execution

This paper identifies inter- and intra-organisational management resources that determine the level of execution of inter-firm alliance supply chain management (SCM). By drawing on network and resource-based view theories, a conceptual model proposes the effects of SCM resources and capabilities as influencing factors on SCM execution. The model was tested using survey data from studies conducted in two European supply chain environments. Variance-based structural equation modelling confirmed the hypothesised hierarchical order of three proposed antecedents: internal SCM resources affect joint SCM resources, which in turn influence collaborative SCM-related processes and finally SCM execution. An importance-performance analysis for both settings shows that providing and investing in internal SCM resources should be a priority when aiming to increase SCM execution. The theoretical contribution of this paper lies in confirming that the improvement of SCM execution follows a clear pathway featuring internal supply chain resources as one of the main drivers. The practical implications of this research include the development of a prioritisation list of measures that elevate SCM execution in the two country settings

Optimal static pricing for a tree network

We study the static pricing problem for a network service provider in a loss system with a tree structure. In the network, multiple classes share a common inbound link and then have dedicated outbound links. The motivation is from a company that sells phone cards and needs to price calls to different destinations. We characterize the optimal static prices in order to maximize the steady-state revenue. We report new structural findings as well as alternative proofs for some known results. We compare the optimal static prices versus prices that are asymptotically optimal, and through a set of illustrative numerical examples we show that in certain cases the loss in revenue can be significant. Finally, we show that static prices obtained using the reduced load approximation of the blocking probabilities can be easily obtained and have near-optimal performance, which makes them more attractive for applications.Massachusetts Institute of Technology. Center for Digital BusinessUnited States. Office of Naval Research (Contract N00014-95-1-0232)United States. Office of Naval Research (Contract N00014-01-1-0146)National Science Foundation (U.S.) (Contract DMI-9732795)National Science Foundation (U.S.) (Contract DMI-0085683)National Science Foundation (U.S.) (Contract DMI-0245352

Business process management and supply chain collaboration: a critical comparison

The link between a firm and supply chain (SC) members has been recognised as one of the key issues for ensuring business success and achieving competitive advantage. Indeed, working across organisational boundaries is required to accomplish effective responses to customers’ needs. Our preliminary research confirmed that there are positive relationships between business process management (BPM), supply chain collaboration (SCC), collaborative advantage and organisational performance. This study is a step further and uses a multiple case design to illuminate the results and gain a greater understanding from extensive discussions about these relationships. By means of semi-structured interviews, the three main issues were identified as: (1) the link between BPM and organisational performance; (2) the link between BPM and SCC; and (3) the contextual factors and benefits achieved from working collaboratively with SC partners. The different scenarios of the link between BPM and SCC were developed in a taxonomy, and the case studies were used to illustrate the experience of intra- and inter-organisational practices in the developing economy of Thailand. The case studies’ results explain in depth that both BPM and SCC are important for improving organisational performance and competitiveness. BPM not only improves organisational performance directly, but also assists with collaborative activities that in turn help to improve internal capabilities. Additionally, the comparisons in issues relating to firm size, industry type, relationship closeness and relationship length were also included in this study

Solving an Avionics Real-Time Scheduling Problem by Advanced IP-Methods

We report on the solution of a real-time scheduling problem that arises in the design of software-based operation control of aircraft. A set of tasks has to be distributed on a minimum number of machines and offsets of the tasks have to be computed. The tasks emit jobs periodically starting at their offset and then need to be executed on the machines without any delay. Also, further constraints in terms of memory usage and redundancy requirements have to be met. Approaches based on standard integer programming formulations fail to solve our real-world instances. By exploiting structural insights of the problem we obtain an IP-formulation and primal heuristics that together solve the real-world instances to optimality and outperform text-book approaches by several orders of magnitude. Our methods lead, for the first time, to an industry strength tool to optimally schedule aircraft sized problems

Combined ship routing and inventory management in the salmon farming industry

We consider a maritime inventory routing problem for Norway's largest salmon farmer both producing the feed at a production factory and being responsible for fish farms located along the Norwegian coast. The company has bought two new ships to transport the feed from the factory to the fish farms and is responsible for the routing and scheduling of the ships. In addition, the company has to ensure that the feed at the production factory as well as at the fish farms is within the inventory limits. A mathematical model of the problem is presented, and this model is reformulated to improve the efficiency of the branch-and-bound algorithm and tightened with valid inequalities. To derive good solutions quickly, several practical aspects of the problem are utilized and two matheuristics developed. Computational results are reported for instances based on the real problem of the salmon farmer