Performance metrics in supply chain management

This survey paper starts with a critical analysis of various performance metrics for supply chain management (SCM), used by a specific manufacturing company. Then it summarizes how economic theory treats multiple performance metrics. Actually, the paper proposes to deal with multiple metrics in SCM via the balanced scorecard — which measures customers, internal processes, innovations, and finance. To forecast how the values of these metrics will change — once a supply chain is redesigned — simulation may be used. This paper distinguishes four simulation types for SCM: (i) spreadsheet simulation, (ii) system dynamics, (iii) discrete-event simulation, and (iv) business games. These simulation types may explain the bullwhip effect, predict fill rate values, and educate and train users. Validation of simulation models requires sensitivity analysis; a statistical methodology is proposed. The paper concludes with suggestions for a possible research agenda in SCM. A list with 50 references for further study is included.     

Coordinated decisions for substitutable products in a common retailer supply chain

This paper studies coordination mechanisms in a supply chain which consists of two suppliers with capacity uncertainties selling differential yet substitutable products through a common retailer who faces price-sensitive random demand of these two products. We develop in a noncompetitive setting three coordination models – revenue sharing, return policy, and combination of revenue sharing and return policy – and contrast them with a basic and uncoordinated model. We are able to establish the ordinal relationship among the retailer’s ordering and pricing decisions and analytically compare the performances between certain models when two suppliers are identical. We find that the retailer’s ordering and pricing decisions in the model with return policy in the case of identical suppliers are independent of demand or supply uncertainty. Our numerical results reveal that the performances of coordination models in the case of nonidentical suppliers resemble those in the case of identical suppliers. We find that the retailer will place a larger order quantity in models where her average cost per unit sold is smaller. We also find that product substitutability and uncertainties have different effects on chain performances.     

Endogenous information acquisition in supply chain management

In this paper, we analyze an endogenous determination of efforts put into information acquisition and its impact on supply chain management. More specifically, we consider a supplier who sells a product to a buyer during a single selling season. Prior to placing an order with the supplier, the buyer has an option to acquire additional information about the demand by hiring experts (who are capable of providing forecasts). Because a commission fee must be paid to each hired expert, there exists a tradeoff between the cost and the value of the information, and the buyer needs to determine how much information to acquire. We derive the optimal information-acquisition level in an integrated setting and compare it with that determined in a decentralized setting. We also analyze several types of supply contracts to examine if they can coordinate the supply chain and allow an arbitrary division of system profit between the supplier and the buyer.     

Channel coordination in green supply chain management

Environmental consciousness has become increasingly important in everyday life and business practice. The effort to reduce the impact of business activities on the environment has been labelled as green supply chain management. Any major greening project would require efforts on the part of the entire supply chain. However, very few studies have addressed the issue of coordinating the green supply chain. We consider the problem of coordination of a manufacturer and a retailer in a vertical supply chain, who put in efforts for ‘greening’ their operations. We address some pertinent questions in this regard such as extent of effort in greening of operations by manufacturer or retailer, level of cooperation between the two parties, and how to coordinate their operations in a supply chain. The greening efforts by the manufacturer and retailer result in demand expansion at the retail end. The decision variables of the manufacturer are wholesale price and greening effort, while those of the retailer are retail price and its greening effort. We find that the ratio of the optimal greening efforts put in by the manufacturer and retailer is equal to the ratio of their green sensitivity ratios and greening cost ratios. Further, profits and efforts are higher in the integrated channel as compared to the case of the decentralized channel. Finally, a two-part tariff contract is found to produce channel coordination in this problem. A numerical example illustrates the results.     

Manufacturing delivery performance for supply chain management

This paper considers single-stage make-to-order production systems. We focus on (1) modeling the appropriate expected costs under a variety of modeling assumptions and (2) characterizing the optimal policies. Our approach to solving the problem is to derive the distribution of actual completion times of the process for individual orders and to compare it to the corresponding quoted due dates in order to obtain the expected total costs. We then show the convexity of the objective cost function for determining the decision variable(s), the planned customer order leadtime.     

Distributed supply chain management using ant colony optimization

Successful supply chain management requires a cooperative integration between all the partners in the network. At the operational level, the partners individual behavior should be optimal and therefore their activities have to be planned using sophisticated optimization tools. However, these tools should take into account the planning of the remaining partners, through the exchange of information, in order to allow some kind of cooperation between the elements of the chain. This paper introduces a new supply chain management technique, based on modeling a generic supply chain with suppliers, logistics and distributers, as a distributed optimization problem. The different operational activities are solved by the optimization meta-heuristic called ant colony optimization, which allows the exchange of information between different optimization problems by means of a pheromone matrix. The simulation results show that the new methodology is more efficient than a simple decentralized methodology for different instances of a supply chain.     

Rich routing problems arising in supply chain management

The purpose of this paper is to provide basic models for highly relevant extensions of the classical vehicle routing problem in the context of supply chain management. The classical vehicle routing problem is extended in various ways. We will especially focus on extensions with respect to lotsizing, scheduling, packing, batching, inventory and intermodality. The proposed models allow for a more efficient use of resources, while explicitly taking into account interdependencies among the subproblems. The contribution of this survey is twofold: (i) it provides an overview of recent and suitable literature for the interested scholar and (ii) it presents six integrative models for the above mentioned extensions.     

Coordinated stocking,clearance sales,and return policies for a supply chain

The results of a study of inter-organizational coordination effect in inventory control, return, and clearance sales policies for a distribution channel consisting of a supplier, a retailer, and a Discount Sales Outlet (DSO) are reported here. We first study the retailer–DSO coordination issues. The products are initially sold in a retail outlet. After the selling season, the leftovers are moved to a DSO for a permanent clearance sale. When the retailer and the DSO coordinate, they share information on the demand forecast and jointly decide the stocking, markdown sales, and return policies to maximize mutual profit. In the absence of coordination, the demand information is not shared by the two parties, and the decisions are decentralized to optimize the individual party’s objective function. For the supplier–retailer–DSO cooperation issue, two models are considered: namely, the Joint Optimal Model (JOM) and the Individual Optimal Model (IOM), respectively. In the IOM, the stocking, markdown sales, and return policies are individually designed by the retailer–DSO, while the supplier independently sets the terms of the return policy. We compare this approach with the JOM, in which the supplier–retailer–DSO jointly designs a mutually beneficial plan so as to maximize the supply chain joint profit. Optimal coordination policies are analyzed, and the factors that make coordination an effective approach are studied.     

Cooperative advertising models in supply chain management: A review

This paper reviews articles on cooperative advertising, a topic which has gained substantial interest in the recent years. Thereby, we first briefly distinguish five different definitions of cooperative advertising which can be found in operations research literature. After that, we concentrate on vertical cooperative advertising, which is the most common object of investigation and is understood as a financial agreement where a manufacturer offers to pay a certain share of his retailer’s advertising expenditures. In total, we identified 58 scientific papers considering mathematical modeling of vertical cooperative advertising. These articles are then analyzed with regard to their general model setting (e.g., the underlying supply chain structure and design of the cooperative advertising program). After that, we explain the different demand and cost functions that are employed, whereupon we distinguish between static and dynamic models. The last dimension of our review is dedicated to the game-theoretic concepts which are mostly used to reflect different forms of distribution of power within the channel.     

Humanitarian aid logistics: supply chain management in high gear

This paper builds on the idea that private sector logistics can and should be applied to improve the performance of disaster logistics but that before embarking on this the private sector needs to understand the core capabilities of humanitarian logistics. With this in mind, the paper walks us through the complexities of managing supply chains in humanitarian settings. It pinpoints the cross learning potential for both the humanitarian and private sectors in emergency relief operations as well as possibilities of getting involved through corporate social responsibility. It also outlines strategies for better preparedness and the need for supply chains to be agile, adaptable and aligned—a core competency of many humanitarian organizations involved in disaster relief and an area which the private sector could draw on to improve their own competitive edge. Finally, the article states the case for closer collaboration between humanitarians, businesses and academics to achieve better and more effective supply chains to respond to the complexities of today's logistics be it the private sector or relieving the lives of those blighted by disaster.     

Goodwill,inventory penalty,and adaptive supply chain management

Information visibility is generally useful for decision makers distributed across supply chains. Availability of information on inventory levels, price, lead times, demand, etc. can help reduce uncertainties as well as alleviate problems associated with bullwhip effect. A majority of extant literature in this area assume a static supply chain network configuration. While this was sufficient a few decades ago, advances in e-commerce and the ease with which order processing can be performed over the Internet necessitates appropriate dynamic (re)configuration of supply chains over time. Each node in the supply chain is modeled as an actor who makes independent decisions based on information gathered from the next level upstream. A knowledge-based framework is used for dynamic supply chain configuration and to consider the effects of inventory constraints and ‘goodwill,’ as well as their effects on the performance dynamics of supply chains. Preliminary results indicate that neither static nor dynamic configurations are consistently dominant. Scenarios where static configurations perform better than the modeled system are identified.     

A stochastic model for risk management in global supply chain networks

With the increasing emphasis on supply chain vulnerabilities, effective mathematical tools for analyzing and understanding appropriate supply chain risk management are now attracting much attention. This paper presents a stochastic model of the multi-stage global supply chain network problem, incorporating a set of related risks, namely, supply, demand, exchange, and disruption. We provide a new solution methodology using the Moreau–Yosida regularization, and design an algorithm for treating the multi-stage global supply chain network problem with profit maximization and risk minimization objectives.     

Schumann,a modeling framework for supply chain management under uncertainty

We present a modeling framework for the optimization of a manufacturing, assembly and distribution (MAD) supply chain planning problem under uncertainty in product demand and component supplying cost and delivery time, mainly. The automotive sector has been chosen as the pilot area for this type of multiperiod multiproduct multilevel problem, but the approach has a far more reaching application. A deterministic treatment of the problem provides unsatisfactory results. We use a 2-stage scenario analysis based on a partial recourse approach, where MAD supply chain policy can be implemented for a given set of initial time periods, such that the solution for the other periods does not need to be anticipated and, then, it depends on the scenario to occur. In any case, it takes into consideration all the given scenarios. Very useful schemes are used for modeling balance equations and multiperiod linking constraints. A dual approach splitting variable scheme is been used for dealing with the implementable time periods related variables, via a redundant circular linking representation.     

A production-inventory model with probabilistic deterioration in two-echelon supply chain management

In this study, a production-inventory model is developed for a deteriorating item in a two-echelon supply chain management (SCM). An algebraical approach is applied to find the minimum cost related to this entire SCM. We consider three types of continuous probabilistic deterioration function to find the associated cost. The purpose of this study is to obtain the minimum cost with integer number of deliveries and optimum lotsize for the three different models. Some numerical examples, sensitivity analysis and graphical representation are given to illustrate the model. A numerical comparison between the three models is also given.     

Quantitative models for sustainable supply chain management: Developments and directions

Sustainability, the consideration of environmental factors and social aspects, in supply chain management (SCM) has become a highly relevant topic for researchers and practitioners. The application of operations research methods and related models, i.e. formal modeling, for closed-loop SCM and reverse logistics has been effectively reviewed in previously published research. This situation is in contrast to the understanding and review of mathematical models that focus on environmental or social factors in forward supply chains (SC), which has seen less investigation. To evaluate developments and directions of this research area, this paper provides a content analysis of 134 carefully identified papers on quantitative, formal models that address sustainability aspects in the forward SC. It was found that a preponderance of the publications and models appeared in a limited set of six journals, and most were analytically based with a focus on multiple criteria decision making. The tools most often used comprise the analytical hierarchy process or its close relative, the analytical network process, as well as life cycle analysis. Conclusions are drawn showing that numerous possibilities and insights can be gained from expanding the types of tools and factors considered in formal modeling efforts.