The warehouse scheduling problem: formulation and algorithms

The Warehouse Scheduling Problem is a deterministic multi-item inventory problem with a restriction on warehouse floor space available. We formulate a mixed integer nonlinear programming problem for the objective of minimizing long run inventory holding and order costs per unit of time. We integrate algorithms for staggering orders, described in companion papers, with a heuristic to choose the order sequences. The result is called Sequenced Staggering. We describe a new algorithm to generate order frequencies, called the powers-of-two-factor-of-three technique, as a generalization of Roundy's roundoff technique for powers-of-two policies. We report on a computational study of four hybrid algorithms for solving the warehouse scheduling problem, including the competing algorithm of Gallego, Queyranne, and Simchi-Levi. Based on these results, we recommend the combination of powers-of-two frequencies with Sequenced Staggering.     

A discounted integrated inspection-maintenance model for a single deteriorating production facility

In this paper, we address the problem of determining optimum inspection schedules for a single deteriorating production system with a predetermined replacement cycle. It is assumed that, at different discrete points in time over the fixed planning horizon, the facility is inspected to detect its operating state and then it goes over an imperfect preventive maintenance routine to enhance its operating performance. Moreover, the facility undergoes minimal repair once detected in an “out‐of‐control” state. We also adopt the concept of discounted cash flow analysis to account properly for the effect of time value of money on the inspection policies. Under these settings, we formulate the discounted integrated inspection‐maintenance problem as a dynamic programming model with general time to failure distribution. After illustrating the model with a numerical example, we perform sensitivity analysis to investigate the effects of some input parameters on the expected present worth and the number of inspections.     

A vendor managed inventory model under contractual storage agreement

Vendor managed inventory (VMI) is a supply chain partnership strategy that allows a supplier to place orders on behalf of its customers. This paper considers a supply chain composed of a single vendor and multiple retailers operating under a VMI contract that specifies limits on retailers' stock levels. We address the problem of synchronizing the vendor's cycle time with the buyers' unequal ordering cycles by developing a mixed integer non-linear program that minimizes the joint relevant inventory costs under storage restrictions. We also propose a cost efficient heuristic to solve the developed optimization problem. We conducted computational experiments to assess the reduction in the total supply chain costs resulting from relaxing the restriction of equal ordering cycles. It is found that the heuristic generates greater cost savings in cases of increased variability in retailers' demand and cost parameters.     

Inventory models for multi-warehouse systems under fixed and flexible space leasing contracts

In this paper, we analyze a practical situation in which an inventory manager is faced with several options to store excess stocks whenever the storage capacity of his/her warehouse is insufficient. The manager can choose from either storage space providers through fixed long term or flexible leasing contracts, or the manager can acquire the extra required space from the spot market. We formulate this inventory problem with multiple storage facilities as a nonlinear program and show that it has a global optimal solution. We then provide closed-form solutions for the optimal ordering quantity and leased spot market space depending on the value of the unconstrained economic order quantity. In addition, we develop some structural properties for the optimal ordering policy and include several examples to illustrate the formulated models.     

Consignment and vendor managed inventory in single-vendor multiple buyers supply chains

In this paper we model a consignment (CS) and vendor-managed inventory (VMI) policy for a single vendor and multiple buyers supply chain with known demand. We study three vendor–buyers partnerships: (i) the vendor and the buyers act independently, (ii) the vendor enters in a vendor-managed inventory consignment (VMI&CS) partnership with the buyers and (iii) the vendor and the buyer belong to a vertically integrated firm where a single decision maker decides about the ordering policies. We use relationships (i) and (ii) to study the benefits of the VMI&CS agreement. We provide analytical and numerical results. We find that such an agreement is more beneficial when the vendor has a flexible capacity. It is also more attractive to buyers when they have significant order costs and the vendor's setup cost is not large. Finally we find that under VMI&CS the vendor will tend to make more frequent shipments with smaller lots.     

Economic production quantity model with a shifting production rate

Typical models for determining the economic production quantity (EPQ) assume perfect product quality and perfect production processes. Deteriorating processes may affect production systems in several ways. They may decrease the quality of the items produced, cause production stoppage and breakdowns and/or reduce the production rate due to production process inefficiency. The purpose of this paper is to present an EPQ model that incorporates the effect of shifts in production rate on lot sizing decisions due to speed losses. The cycle starts with a certain production rate and after a random time, the production rate shifts to a lower value. A mathematical model to determine the optimal production policy under these conditions is developed and analyzed. Numerical examples are presented for illustrative purposes.     

An integrated retail space allocation and lot sizing models under vendor managed inventory and consignment stock arrangements

In this paper, we develop integrated retail shelf space allocation and inventory models for a single item with a stock dependent demand. The integrated models are developed for a supply chain operating under vendor-managed inventory (VMI) and consignment stock (CS) agreement. More precisely, the supplier is responsible for initiating orders on behalf of the retailer and decides about the size of each order, the quantity to be displayed on the shelves, and the reorder point. In addition, the supplier owns the stock at the retailer’s premises until it is sold. We develop mathematical models to assess the benefits accrued by both parties as a result of the adoption of VMI–CS partnership. Results from the numerical experimental study show that such partnership is more attractive to all supply chain members when the retailer provides a flexible display capacity. Moreover, the supplier can use his/her selling price and the maximum allocated shelf space as negotiation means to benefit from the partnership.     

Time-variant lot sizing models for the warehouse scheduling problem

We consider the problem of scheduling the delivery of n products into a warehouse with limited space under the assumptions of continuous demands at constant rates, infinite horizon, and no backorders. The delivery schedule is described by a cyclic schedule with time-varying lot sizes. The order frequencies and the order sequence are assumed to be given. We formulate a linear program that determines delivery times relative to the cycle length to minimize the relative maximum space used and show that the optimal solution is characterized by filling the warehouse at each order. We bound the optimal solution by using a worst-case analysis and give conditions under which the linear program has the same optimal solution as a quadratic program that minimizes the holding cost. Under general conditions, we derive a bound on the cost penalty that results when using the optimal solution of the linear program as a solution to the quadratic program. Finally, we complete a solution to the nonlinear lot-sizing model by determining the best cycle length corresponding to the solution to the linear program and present a bound on a quality of this solution.     

Operational and environmental decisions for a two-stage supply chain under vendor managed consignment inventory partnership

Supply-chain-based organisations are nowadays facing intense pressure to abide to environmental regulatory requirements while they are striving to be responsive to customers’ needs at the least cost possible. As supply chain activities are among the top contributors to carbon emissions, several recent research works have investigated the impact of carbon regulation policies on economic and environmental supply chain performance. This paper presents integrated economic and environmental models for the one-vendor one-buyer supply chain problem under a vendor managed consignment inventory (VMCI) arrangement. Through the developed models, we study the impacts of two carbon reduction policies, namely carbon cap and carbon tax policies, on supply chain wide costs and carbon emissions. We first provide a much simpler and more compact formulation for the basic single-vendor single-buyer supply chain under VMCI agreement. We also present an environmental-based VMCI model where reduction of carbon footprint is considered as the only objective function. We then extend these two basic models to include each of the two carbon emissions reduction policies. We identify structural properties for the optimal solutions of the two hybrid economic and environmental models and propose algorithms to generate optimal solutions. The results of the computational experiments reveal that the implementation of carbon reduction policies, through carbon cap and carbon tax, may call for the adjustment of the vendor’s production and buyer’s delivery quantities to reduce carbon footprint without significantly increasing the operational costs.