A cost operator approach to multistage location-allocation

The multistage factory-warehouse location-allocation problem is to decide on locations of warehouses and shipping amounts from the factories through the warehouses to meet customer demands in such a way that the total fixed plus variable costs are minimized. Capacity constraints at factories and warehouses are also imposed.We present a cost operator algorithm for solving this problem. The algorithm takes into account the network structure and the submodularity of the objective function. Computational results with problems taken from the literature as well as new problems are provided.     

A large-scale application of the partial coverage uncapacitated facility location problem

The traditional, uncapacitated facility location problem (UFLP) seeks to determine a set of warehouses to open such that all retail stores are serviced by a warehouse and the sum of the fixed costs of opening and operating the warehouses and the variable costs of supplying the retail stores from the opened warehouses is minimized. In this paper, we discuss the partial coverage uncapacitated facility location problem (PCUFLP) as a generalization of the uncapacitated facility location problem in which not all the retail stores must be satisfied by a warehouse. Erlenkotter's dual-ascent algorithm, DUALOC, will be used to solve optimally large (1600 stores and 13?000 candidate warehouses) real-world implemented PCUFLP applications in less than two minutes on a 500?MHz PC. Furthermore, a simple analysis of the problem input data will indicate why and when efficient solutions to large PCUFLPs can be expected.     

Computationally Efficient Solution of a Multiproduct,Two-Stage Distribution—Location Problem

A two-stage distribution planning problem, in which customers are to be served with different commodities from a number of plants, through a number of intermediate warehouses is addressed. The possible locations for the warehouses are given. For each location, there is an associated fixed cost for opening the warehouse concerned, as well as an operating cost and a maximum capacity. The demand of each customer for each commodity is known, as are the shipping costs from a plant to a possible warehouse and thereafter to a customer. It is required to choose the locations for opening warehouses and to find the shipping schedule such that the total cost is minimized. The problem is modelled as a mixed-integer programming problem and solved by branch and bound. The lower bounds are calculated through solving a minimum-cost, multicommodity network flow problem with capacity constraints. Results of extensive computational experiments are given.     

Integrating transportation and production: an international study case

The problem we study is inspired by the real case of Mesdan S.p.A., an Italian company worldwide leader in the textile machinery sector, which has two production units with two warehouses, one located in Italy (Brescia) and the other in China (Foshan). The critical point in this logistic system is the integration between production and transportation management, given the long distance between Brescia and Foshan. Shipments are performed by the means of different types of vehicles with different unit costs and significantly different lead times. Variable production costs, variable and fixed transportation costs and, possibly, inventory costs are charged in the objective function. Different production policies are compared. Our aim is to determine integrated policies that minimize the total cost of the system. We formulate integer linear programming models for the solution of these problems, and we solve the real instance and carry out a sensitivity analysis of the optimal solution.     

Some Add-Drop and Drop-Add Interchange Heuristics for Non-Linear Warehouse Location

Some algorithms are described for solving plant location problems with non-linear warehousing costs. The heuristic procedures are flexible with respect to the type of warehousing cost structure permitted, and may be used to solve fixed p-median location problems as well as problems in which the numbers and locations of warehouses in solution are jointly determined as a trade-off between transportation and fixed and operating plant costs. Computational experience is reported on some well known problem sets in which the economies of scale in production are continuously concave. Comparisons with other solution methods indicate that the proposed procedures perform as well as, or better than any currently known on these standard tests problems.     

Application of fuzzy optimization to a supply chain network design: A case study of an edible vegetable oils manufacturer

This study applies fuzzy sets to integrate the supply chain network of an edible vegetable oils manufacturer. The proposed fuzzy multi-objective linear programming model attempts to simultaneously minimize the total transportation costs. The first part of the total transportation costs is between suppliers and silos; and rest one is between manufacturer and warehouses. The approach incorporates all operating realities and actual flow patterns at production/distribution network with reference to demands of warehouses, capacities of tin and pet packaging lines. The model has been formulated as a multi objective linear programming model where data are modeled by triangular fuzzy numbers. Finally, the developed fuzzy model is applied for the case study, compiled the results and discussed.     

Vehicle routing considerations in distribution system design

In Distribution System Design, one minimizes total costs related to the number, locations and sizes of warehouses, and the assignment of warehouses to customers. The resulting system, while optimal in a strategic sense, may not be the best choice if operational aspects such as vehicle routing are also considered.We formulate a multicommodity, capacitated distribution planning model as anon-linear, mixed integer program. Distribution from factories to customers is two-staged via depots (warehouses) whose number and location must be chosen. Vehicle routes from depots to customers are established by considering the “fleet size and mix” problem, which also incorporates strategic decisions on fleet makeup and vehicle numbers of each type. This problem is solved as a generalized assignment problem, within an algorithm for the overall distribution/routing problem that is based on Benders decomposition. We furnish two version of our algorithm denoted Technique I and II. The latter is an enhaancement of the former and is employed at the user's discretion. Computer solution of test problems is discussed.     

A branch and bound algorithm for the two-level uncapacitated facility location problem with some side constraints

This paper deals with the problem of locating at minimum total costs both plants and warehouses in a two-level distribution system where commodities are delivered from plants to customers either directly or indirectly via warehouses. Some side-constraints are imposed on the problem, which represent the adjunct relationship of some warehouses to a certain plant. Proposed is an efficient branch and bound solution procedure, employing a set of new devices for lower bounds and simplifications which are obtained by exploiting the submodularity of the objective function and the special structure of the side-constraints. Computational experiments with fifteen test problems are provided.     

Service differentiation through selective lateral transshipments

We consider a multi-item spare parts problem with multiple warehouses and two customer classes, where lateral transshipments are used as a differentiation tool. Specifically, premium requests that cannot be met from stock at their preferred warehouse may be satisfied from stock at other warehouses (so-called lateral transshipments). We first derive approximations for the mean waiting time per class in a single-item model with selective lateral transshipments. Next, we embed our method in a multi-item model minimizing the holding costs and costs of lateral and emergency shipments from upstream locations in the network. Compared to the option of using only selective emergency shipments for differentiation, the addition of selective lateral transshipments can lead to significant further cost savings (14% on average).     

Elementary Theory of Optimal Silo Storage Design

This study indicates a method for calculating an economic division of warehouses into compartments when different varieties have to be stored simultaneously and separately. The study deals with cases where the total storage capacity demand and the number of varieties are known and fixed, but where the storage capacity demand of each variety is unknown. Problems of this nature exist in the preliminary designing of grain silos, fleets of transport vehicles, utensils in public kitchens, etc. If the warehouse capacity can cope with the total storage capacity demand, but the number of compartments is insufficient, it is possible that part of the material to be stored cannot be accommodated, although certain compartments may only be partly filled; this will be due to the impossibility of storing different varieties together. The materials will have to be stored in other warehouses, at a higher charge per capacity unit than that of the warehouse in question.The division of the warehouse into a large number of compartments will assure storage of most, if not all, the material. On the other hand, increase in the number of compartments (and installations) makes for increased investment in transport installation, partitions and additional storage capacity to compensate for space taken up by these partitions and installations.The object of this study is to introduce a method for calculating the optimal division of a warehouse into compartments, so that the annual costs of storage and capital investment are minimized.It is possible-by introducing not very restrictive statistical assumptions-to calculate the annual costs of storing excluded material elsewhere for different modes of partitioning a warehouse into compartments. The annual building cost of the warehouse is calculated in the ordinary way.In this study a solution is offered for the partitioning of a warehouse into equal compartments. It is to be expected that the extension of this solution to cases of the partition into compartments, differing from each other as to storage capacity, will tend to lower costs.     

回收率依赖价格的再制造EPQ模型研究

研究了考虑回收率依赖于回收品价格,并带有废弃处理的制造和再制造混合系统的(1,R)和(M,1)EPQ模型.在模型中,采用新产品的制造和回收产品的再制造两种方式来满足客户的需要,回收产品部分用于再制造,其余作为废弃处理;总平均成本包括与回收产品、可销售产品有关的库存持有成本,与制造和再制造有关的生产成本和固定成本,与回收品及制造所需原材料的采购成本以及废弃处理成本.模型给出最优生产策略及总平均成本的表达式.算例验证了所建模型的计算方法,并分析了新引人决策变量p(回收产品单价占制造新产品所需原料价格的比例对总平均成本的变化率的影响.     

Joint pricing and inventory control with a Markovian demand model

We consider the joint pricing and inventory control problem for a single product over a finite horizon and with periodic review. The demand distribution in each period is determined by an exogenous Markov chain. Pricing and ordering decisions are made at the beginning of each period and all shortages are backlogged. The surplus costs as well as fixed and variable costs are state dependent. We show the existence of an optimal (s, S, p)-type feedback policy for the additive demand model. We extend the model to the case of emergency orders. We compute the optimal policy for a class of Markovian demand and illustrate the benefits of dynamic pricing over fixed pricing through numerical examples. The results indicate that it is more beneficial to implement dynamic pricing in a Markovian demand environment with a high fixed ordering cost or with high demand variability.     

Congruential Inventory Model for Two-Echelon Distribution Systems

Large-scale inventory-distribution systems typically comprise a hierarchy of warehouses that stock goods for distribution to retailers at which demand for these goods originates. This paper develops an inventory model for two-echelon distribution systems under the assumption that the central warehouse and retailers order periodically. Characteristics of the optimal policy are described. An iterative solution procedure is presented to find optimal or near optimal operating-policy variables. Solutions of the model to a large number of test examples show that the model outperforms other existing models in the literature without sacrificing the computation time. Tested against the lower bounds on the optimal average annual variable cost obtained by removing some of the ordering costs, the solutions of the present model are found to be near optimal.     

A simple algorithm for the source-induced fixed-charge transportation problem

The fixed-charge problem is a non-linear programming problem of practical interest in business and industry. The source-induced fixed-charge transportation problem (SIFCTP) is a variation of the regular fixed-charge transportation problem (FCTP) in which a fixed cost is incurred for every supply point that is used in the solution, along with a variable cost that is proportional to the amount shipped. This problem is significantly different from the widely studied FCTP, where a fixed cost is incurred upon activation of a route. The introduction of the fixed costs in addition to variable costs results in the objective function being a step function. Therefore, fixed-charge problems are usually solved using sophisticated analytical or computer software. This paper deviates from that approach. It presents a computationally simple algorithm for the solution of source-induced fixed-charge problems. The results of empirical tests of the effectiveness of the proposed algorithm are presented.     

A Simple Algorithm for Solving Small,Fixed-Charge Transportation Problems

The solution of the classical transportation problem (as generally presented) can be mastered very quickly. The fixed-charge problem is another matter. The reason is that the introduction of fixed costs in addition to variable costs results in the objective function being a step function. Fixed-charge problems are usually solved, therefore, by using sophisticated computer software. This paper deviates from that approach. It presents a low-tech. algorithm for the solution of small, fixed-charge problems.     

Cooperation in assembly systems: The role of knowledge sharing networks

Process improvement plays a significant role in reducing production costs over the life cycle of a product. We consider the role of process improvement in a decentralized assembly system in which a buyer purchases components from several first-tier suppliers. These components are assembled into a finished product, which is sold to the downstream market. The assembler faces a deterministic demand/production rate and the suppliers incur variable inventory costs and fixed setup production costs. In the first stage of the game, which is modeled as a non-cooperative game among suppliers, suppliers make investments in process improvement activities to reduce the fixed production costs. Upon establishing a relationship with the suppliers, the assembler establishes a knowledge sharing network – this network is implemented as a series of meetings among suppliers and also mutual visits to their factories. These meetings facilitate the exchange of best practices among suppliers with the expectation that suppliers will achieve reductions in their production costs from the experiences learned through knowledge sharing. We model this knowledge exchange as a cooperative game among suppliers in which, as a result of cooperation, all suppliers achieve reductions in their fixed costs. In the non-cooperative game, the suppliers anticipate the cost allocation that results from the cooperative game in the second stage by incorporating the effect of knowledge sharing in their cost functions. Based on this model, we investigate the benefits and challenges associated with establishing a knowledge sharing network. We identify and compare various cost allocation mechanisms that are feasible in the cooperative game and show that the system optimal investment levels can be achieved only when the most efficient supplier receives the incremental benefits of the cost reduction achieved by other suppliers due to the knowledge transfer.     

Integrated location and two-echelon inventory network design under uncertainty

In this paper, we propose a two-stage stochastic model to address the design of an integrated location and two-echelon inventory network under uncertainty. The central issue in this problem is to design and operate an effective and efficient multi-echelon supply chain distribution network and to minimize the expected system-wide cost of warehouse location, the allocation of warehouses to retailers, transportation, and two-echelon inventory over an infinite planning horizon. We structure this problem as a two-stage nonlinear discrete optimization problem. The first stage decides the warehouses to open and the second decides the warehouse-retailer assignments and two-echelon inventory replenishment strategies. Our modeling strategy incorporates various probable scenarios in the integrated multi-echelon supply chain distribution network design to identify solutions that minimize the first stage costs plus the expected second stage costs. The two-echelon inventory cost considerations result in a nonlinear objective which we linearize with an exponential number of variables. We solve the problem using column generation. Our computational study indicates that our approach can solve practical problems of moderate-size with up to twenty warehouse candidate locations, eighty retailers, and ten scenarios efficiently.     

The fleet size and mix problem for capacitated arc routing

There have been several attempts to solve the capacitated arc routing problem with m vehicles starting their tours from a central node. The objective has been to minimize the total distance travelled. In the problem treated here we also have the fixed costs of the vehicles included in the objective function. A set of vehicle capacities with their respective costs are used. Thus the objective function becomes a combination of fixed and variable costs. The solution procedure consists of four phases. In the first phase, a Chinese or rural postman problem is solved depending on whether all or some of the arcs in the network demand service with the objective of minimizing the total distance travelled. It results in a tour called the giant tour. In the second phase, the giant tour is partitioned into single vehicle subtours feasible with respect to the constraints. A new network is constructed with the node set corresponding to the arcs of the giant tour and with the arc set consisting of the subtours of the giant tour. The arc costs include both the fixed and variable costs of the subtours. The third phase consists of solving the shortest path problem on this new network to result in the least cost set of subtours represented on the new network. In the last phase a postprocessor is applied to the solution to improve it. The procedure is repeated for different giant tours to improve the final solution. The problem is extended to the case where there can be upper bounds on the number of vehicles with given capacities using a branch and bound method. Extension to directed networks is given. Some computational results are reported.     

The optimization of repair decision using life-cycle cost Parameters

Life-cycle cost models typically minimize system repair costsas a function of various cost coefficients associated with agiven repair option such as discarding upon failure or repairingthe components. Fixed costs such as set-up costs pose specialproblems for the minimization of life-cycle costs: first ofall, fixed costs are characterized by step functions linkedto capacity constraints, while variable costs are representedby continuous functions. Secondly, both categories of cost shouldbe evaluated simultaneously for all components of a physicalsystem and for all repair options. Thirdly, there are operational–researchtools such as mixed integer programming which can solve largeproblems of this type under a set of acceptable simplifyingassumptions. Heuristic methods can be used to minimize the searchtime for a global optimum solution. This paper describes anapproach which has been successfully applied to maintenanceplanning, vibration analysis, and expert fault diagnostics.One of these applications is discussed in detail as an illustrationof the method proposed.     

Optimal securitization of credit portfolios via impulse control

We study the optimal loan securitization policy of a commercial bank which is mainly engaged in lending activities. For this we propose a stylized dynamic model which contains the main features affecting the securitization decision. In line with reality we assume that there are non-negligible fixed and variable transaction costs associated with each securitization. The fixed transaction costs lead to a formulation of the optimization problem in an impulse control framework. We prove viscosity solution existence and uniqueness for the quasi-variational inequality associated with this impulse control problem. Iterated optimal stopping is used to find a numerical solution of this PDE, and numerical examples are discussed.