Optimal design methodologies for configuration of supply chains

This paper describes a methodology developed for designing an optimal configuration for a supply chain. A typical configuration for a supply chain consists of defining components of the system, assigning values to characteristics parameters of each component and setting operation policies for governing the interrelationships among these components. As such, each configuration will be defined by a set of values for quantitative parameters of the system as well as a set of policy and qualitative characteristics. Examples of quantitative variable include inventory levels and frequency of ordering where as location of distribution centres and mode of transportation between suppliers and the original equipment manufacturers (OEM) are the decision variables of policy and qualitative nature. The methodology presented here consists of a supply chain model builder coupled with two optimisation algorithms that automatically build a sequence of configurations that systematically move towards an optimum design. A combination of mixed integer programming and a genetic algorithm is used to determine simultaneously the values of quantitative as well as policy variables. The solution consists of strategic decisions regarding facility locations, stocking locations, supplier selection, production policies, production capacities, and transportation modes.     

The impact of dual-market on supply chain configuration for new products

Given a firm’s supply chain network, the key objective of supply chain configuration (SCC) is to determine a subset of supply chain partners to be involved in development, sourcing, production, distribution and support of a new product at the highest level of efficiency and expected responsiveness. Current literature on SCC realises the importance of considering the demand dynamics associated with the new product diffusion (NPD). However, these studies assume one-segment market for new products, a single homogenous consumer segment. Recent research in marketing indicates that such simplification might be fatal because a diverse and significant number of product categories may experience a dual-market structure, namely early and main markets, and generate a different demand dynamics. The objectives of this study are to: (i) develop a hybrid optimisation model, capturing both SCC decisions and the demand dynamics of dual-market NPD process; (ii) based on real-world data for a host of electronic product categories, various SCC networks and NPD demand dynamics, examine the new integrated optimisation model under one- and two-segment market; and (iii) present relevant managerial implications and guidelines for supply chain and marketing managers. Our extensive comparative computational experiment with 26 categories of consumer electronic products show that on average the relative net profit may improve significantly, when the market is considered as two-segment.     

Review of supply chain configuration and design decision-making for new product

The nature of competitive markets continuously pushes manufacturers to develop new products to meet the increasingly diversified customer demands. Manufacturers thus have to handle the complexities generated during the total life cycles of various product types, from product design to procurement, production, marketing and recycling. Though some management practices in mass customisation help to improve the performance of manufacturing systems, there are still some fundamental problems not covered. Joint decision-making of product and supply chain design, for example, is one of them. The existing industrial practice tends to treat these two problems separately. Decoupling these two problems decrease the design complexity but may lead to suboptimal decision outcome. To enhance understanding of the interconnected decisions for supply chain management and product design, this review collects related literature on this topic and focuses on the analysis of existing papers from an operation research perspective.     

Optimal configuration of assembly supply chains using analytical target cascading

This paper proposes to apply analytical target cascading (ATC) for configuring assembly supply chains with convergent structures. Individual enterprises in a supply chain are represented as separate elements in an ATC hierarchy. They are able to maintain autonomous and heterogeneous decision systems for optimising their private decision variables and objectives. They collaborate vertically and laterally along the ATC hierarchy through their common decisions to achieve the overall consistency and optimality. ATC offers a competitive balance between computational efficiency and effectiveness while providing an opportunity for parallel computation to further improve the efficiency. This paper also investigates the feasibility for individual enterprises to set local targets while participating in the supply chain configuration (SCC). SCC usually involves discrete decision variables, causing significant difficulties for existing ATC techniques to achieve system consistency. Therefore, a new consistency scheme has to be proposed in this paper, including two techniques: importance weighting factor (IWF) and dynamic constraints (DC). A case study is used to demonstrate the application of the ATC method for solving typical SCC problems. A series of comparative analyses are conducted to identify the strengths of the ATC method and demonstrate the effectiveness of the proposed consistency scheme.     

大批量定制环境中的产品配置规则

本文主要对产品配置中的配置机理及其实现进行研究;首先,论述了大批量定制模式中的产品配置技术,分析了目前基于规则驱动的产品配置技术的发展和优缺点;其次,讨论了面向产品族群的产品配置中的规则构件方法,并提出了基于此理论的产品配置框架;然后,重点阐述了面向产品族群的、通用的产品配置中规则的结构,并给出了规则配置的算法和规则匹配引擎的推理流程;最后,通过案例分析验证了此技术的可行性,并给出了基于此技术实现的产品配置系统的运行实例.     

Pricing decisions of complementary products in a two-level fuzzy supply chain

Pricing decisions of two complementary products in a two-level fuzzy supply chain with two manufacturers and one common retailer are studied in this paper. By considering the two manufacturers and one common retailer’s leader–follower relationship, the two manufacturers’ pricing strategy and the fuzzy uncertainties associated with the manufacturing costs and customer demands of the complementary products, seven pricing games are considered. The corresponding closed-form optimal pricing decisions are obtained in the seven pricing games. Through using numerical studies and sensitivity analysis of parameters’ fuzzy degree, we compare the analytical results of different games and investigate the firms’ optimal decisions facing changing pricing environments. At last, we analyse the effect of the fuzzy degree of key parameters on optimal prices, maximal expected demands and maximal expected profits of different games. Some interesting and valuable managerial insights are established.     

A heuristic-based approach to integrate the product line selection decision to the supply chain configuration

Product platform development (PPD) as an approach to mass customisation (MC) helps an organisation to reduce costs as well as ensure timely deliveries. Varieties are offered to different market segments by combining and incorporating different modules at different levels. Modules at different levels are essentially features that a customer segment is looking for. It is apparent that overall optimisation would require simultaneous consideration of not only PPD but also other supply chain constraints. In this paper, an attempt has been made to develop a mixed integer linear programming (MILP) model for sourcing, production planning, and PPD decisions. Based on analyses of the model, a heuristic solution procedure has been suggested. The heuristic developed in this paper attempts to decompose the problem and then assimilate the outputs from the simpler parts to obtain the final solution. Finally, a simple example to illustrate the solution procedure is presented.     

Product quality choice in two-echelon supply chains under post-sale liability: insights from wholesale price contracts

This paper considers a two-echelon supply chain consisting of an upstream manufacturer (M) and a downstream Retailer (R) who transact intermediate products via a wholesale price contract. The supply chain provides an experience good to unit-demand consumers. M is liable for the harm caused by its products in a low quality state. A two-stage game model is built to describe how the supply chain operates. With the equilibrium and under certain assumptions, this paper finds that (1) in spite that post-sale product liability positively affects the wholesale price, M’s quality level, the contracted quantity and supply chain members’ profitability are independent of it; (2) when liability-related factors and M’s quality improvement efficiency change, the wholesale price serves as a medium for M and R to mutually share the ex ante expected liability cost, the demand loss caused by the ex ante expected consumer harm and the ex ante quality-improving cost; (3) in response to changes in liability-related factors, the quality performance is in conflict with the financial performance for both M and R, but this conflict disappears in the presence of a change in quality improvement efficiency. Managerial insights are also discussed.     

Negotiation-based collaborative planning in divergent two-tier supply chains

Advanced Planning Systems are based on the principles of hierarchical planning, which—at least at the top level—grounds on centralized planning. However, central coordination requires access to all relevant information and the power to impose planning results on all organizational units. In consequence it can be realized only for parts of an inter-organizational supply chain, and the question arises whether there exist alternate ways to achieve coordination. In this paper we describe a non-hierarchical, negotiation-based process, which can be used to synchronize plans between independent partners of a two-tier supply chain consisting of one supplier and several buyers. Assuming that all partners generate plans based upon mathematical programming—as in most Advanced Planning Systems at the master planning level—we show how modified versions of these models can be utilized to support the negotiation process by evaluating given purchasing orders or supplies and by generating counter-proposals. Resulting is an iterative, negotiation-like scheme, which establishes and subsequently improves a consistent overall plan based on a limited exchange of information between the supply chain partners.     

Safety stock placement problem in capacitated supply chains

Today's highly competitive business environment forces supply chain managers to maintain high service levels while keeping inventory-related costs as low as possible. Therefore, placing the right amount of safety stock at the right places in the supply chain is an important aspect of effective inventory management. This safety stock placement problem, for which some solution strategies have been proposed in the case of uncapacitated supply chains, becomes much more complicated when, in addition to the variability of the demand, capacity constraints also come into play. In this paper we propose a model to locate safety stocks in a capacitated supply chain with the objective of maintaining the required service level. The underlying relationships linking excess capacity, demand variability, and service levels are analysed to gain deeper understanding of the safety stock placement problem in capacitated supply chains. Based on these relationships a solution approach for the problem is proposed and is tested with Monte Carlo simulation.     

Integrated planning in supply chains with buy-side and sell-side marketplaces

In this paper we develop a quadratic programming model for partner selection and planning in integrated supply chain networks embedded with both sell-side and buy-side electronic marketplaces. Such a scenario arises in several practical applications. In particular, we consider a contract manufacturer who procures components from suppliers through a component marketplace and sells its manufactured sub-assemblies to original equipment manufacturers (OEMs), through a sub-assembly marketplace. In these web-enabled supply chains, embedded with upstream and downstream electronic marketplaces, we need methods for online supply-chain partner selection based on pricing and delivery schedules. In this paper, we develop and present such a model that selects partners, synchronizes supply chain activities and optimizes the profit through optimal revenue pricing and cost minimization.     

Incorporating cellular manufacturing into supply chain design

This paper presents a mathematical model. The model is used to integrate the design of cellular manufacturing systems with the design of a production network. The objective of the model is to minimize the sum of production and supply-chain costs. The model selects production (facility) locations and forms cells in the selected locations. Two heuristic procedures are presented to solve the model. These procedures are used to generate solutions for several test problems. The test shows the heuristic procedures generate solutions in a reasonable time frame. The results also show that the best solutions were generated by a tabu search procedure. The proposed approach is also compared with an approach that independently selects locations and then forms cells. This second test shows that reduced costs can be obtained using the integrated model.     

Coordinated order and production policies in supply chains

This paper is focused on the coordination of order and production policy between buyers and suppliers in supply chains. When a buyer of an item decides independently, he will place orders based on his economic order quantity (EOQ). However, the buyers EOQ may not lead to an optimal policy for the supplier. Should the buyer have the more powerful position to enforce his EOQ on the supplier, then no incentive exists for him to deviate from his EOQ. To provide an incentive to order in quantities suitable to the supplier, the supplier could offer a price discount or side payment. One critical assumption made throughout the literature dealing with incentive schemes to influence buyers ordering policy is that the supplier has complete information regarding buyers cost structure. This paper provides a bargaining model with asymmetric information about the buyers cost structure. A self-selection model for the determination of an optimal set of contracts which are specifically designed for different cost structures of the buyer, assumed by the supplier, will be presented.     

Simulation and optimization of supply chains: alternative or complementary approaches?

Discrete-event simulation and (mixed-integer) linear programming are widely used for supply chain planning. We present a general framework to support the operational decisions for supply chain networks using a combination of an optimization model and discrete-event simulation. The simulation model includes nonlinear and stochastic elements, whereas the optimization model represents a simplified version. Based on initial simulation runs cost parameters, production, and transportation times are estimated for the optimization model. The solution of the optimization model is translated into decision rules for the discrete-event simulation. This procedure is applied iteratively until the difference between subsequent solutions is small enough. This method is applied successfully to several test examples and is shown to deliver competitive results much faster compared to conventional mixed-integer models in a stochastic environment. It provides the possibility to model and solve more realistic problems (incorporating dynamism and uncertainty) in an acceptable way. The limitations of this approach are given as well.     

Integration strategies of two supply chains with complementary products

This paper studies the manufacturer's and retailer's integration strategies in a supply chain with complementary products and examines the effects of downstream, upstream and vertical integrations on supply chain members' decisions and profits and on supply chain performance. The centralised and decentralised decision models are considered as benchmarks that are compared to downstream, upstream and vertically integrated strategies. Our comparison and analysis show that the total profit of the supply chain increases with the number of integrated players and that vertical integration can be more profitable than that of upstream and downstream integrations. However, to our surprise, the upstream and downstream integration strategies do not affect the total profit.     

Making supply chain design the rational differentiating characteristic of the OEMs

For more complex products that require customers to undertake learning in order to retrieve or realize the products’ true values, the product design and supply management decisions are different from those of less complex products. Nonetheless, in spite of the undeniable significance of coordinating decisions across product design and supply chain structures, we know very little about how to do so in practical ways. In this paper, we build on previous findings and offer a framework to enable the application of the supply chain structure design early in the new product introduction process. The proposed framework is based on a field study of the common practices in one of the major North American automakers, but we believe that it is widely applicable in other industries.     

Demand network alignment: aligning the physical,informational and relationship issues in supply chains

The aim of this paper is to propose a model for the inter-relationship and alignment of supply and demand networks from two perspectives namely the physical/operational (including information/knowledge systems), and the relationship/behavioural that affect collaborating partners. The two perspectives need to be considered simultaneously to realize the dynamics of supply chains and the issues affecting their management. The paper presents the development of the model on a conceptual level, and utilizes the data from a case study to depict the effect of these two perspectives in understanding supply chain dynamics.     

Model predictive control for inventory management in biomass manufacturing supply chains

This paper presents a centralised model predictive control strategy applied to biomass inventory control in sugarcane industries. Sugarcane industries are important renewable energy producers and an adequate inventory control of their feed material (biomass) can improve energy production. Simple linear discrete-time models with dead-time are developed to predict the controlled variable behaviour. Two layers are used in the controller, in the upper one performance is optimised by an linear programming (LP) algorithm and a multivariable generalised predictive controller (GPC) or multivariable generalised predictive controller with dead-time compensation (DTC-GPC) is used in the lower level. Simulation results in general show that the proposed controllers globally optimise the system behaviour and find an optimal ordering amount for keeping stock levels. In cases of plant/model mismatch DTC-GPC can have a significant and positive impact on the control of stock levels adding one more parameter for achieving minimised oscillatory performances (bullwhip effect).     

Supplier selection problem revisited from the perspective of product configuration

Collaboration with suppliers is essential for developing and producing a competitive product and it begins with selecting the right suppliers. This article addresses the supplier selection problem from the perspective of product configuration. We discuss first how the conventional decision models of supplier selection should be extended, considering the fact that supplier configuration requires supplier selection for each subsystem of a product. We then highlight the need to consider interrelationships between suppliers, namely, supplier–supplier relationships during the selection process of the combination of suppliers. Finally, we introduce the supplier configuration graph in order to provide a clear picture of the problem. Discussions are provided along with an example of a smartphone configuration.