An inventory sharing and allocation method for a multi-location service parts logistics network with time-based service levels

We consider a model to allocate stock levels at warehouses in a service parts logistics network. The network is a two-echelon distribution system with one central warehouse with infinite capacity and a number of local warehouses, each facing Poisson demands from geographically dispersed customers. Each local warehouse uses a potentially different base stock policy. The warehouses are collectively required to satisfy time-based service targets: Certain percentages of overall demand need to be satisfied from facilities within specified time windows. These service levels not only depend on the distance between customers and the warehouses, but also depend on the part availabilities at the warehouses. Moreover, the warehouses share their inventory as a way to increase achieved service levels, i.e., when a local warehouse is out of stock, demand is satisfied with an emergency shipment from another close-by warehouse. Observing that the problem of finding minimum-cost stock levels is an integer non-linear program, we develop an implicit enumeration-based method which adapts an existing inventory sharing model from the literature, prioritizes the warehouses for emergency shipments, and makes use of a lower bound. The results show that the proposed inventory sharing strategy results in considerable cost reduction when compared to the no-sharing case and the method is quite efficient for the considered test problems.     

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.     

Production planning and warehouse management in supply networks with inter-facility mold transfers

This paper, considers with the problem of production capacity and warehouse management in a supply network in which inter-plant mold transfers are enabled. The supply network has a limited number of very expensive molds which can be transferred from a plant to another making it possible for each plant to produce the entire product gamut. It is assumed that warehouses in this supply network can be activated and deactivated as required, and that material transfers from a warehouse to another are also possible. The objective is to develop a capacity and warehouse management plan that satisfies the expected market demands with the lowest possible cost. A mixed integer programming model for the problem is suggested and its properties are discussed. A linear programming-based heuristic that combines Lagrangian relaxation and linear programming duality to generate lower and upper bounds for the problem is proposed. Finally, based on a designed experiment the performance of the heuristic on a set of generated test problems is reported and discussed.     

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.     

Solution procedures for sizing of warehouses

In the past, researchers presented a linear programming formulation for the economic sizing of warehouses when demand is highly seasonal and public warehouse space is available on a monthly basis. The static model was extended for the dynamic sizing problem in which the warehouse size is allowed to change over time. By applying simplex routine, the optimal size of the warehouse to be constructed could be determined. In this paper, an alternative and simple method of arriving at an optimal solution for the static problem is given. Three extensions of the static model are given. These extensions involve costs varying over time, economies of scale in capital expenditure and/or operating cost and stochastic version. The dynamic warehouse sizing problem is shown to be a network flow problem which could be solved by using network flow algorithms. The structure of an optimal solution is also given. The concave cost version of the dynamic warehouse sizing problem is also discussed and it is shown that this problem can be solved efficiently using dynamic programming.     

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.     

A Plant and Warehouse Location Problem

A model is proposed for the simultaneous location of plants and warehouses among a given set of possible locations in order to satisfy a given demand at minimum cost. The demand of each customer may be satisfied directly from a plant or through a warehouse. The model also applies to the design of a distribution network with two levels of warehouses. A branch-and-bound algorithm, which generalizes previous work by Efroymson and Ray and others, is presented, computational experience is reported on.     

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).     

井位不确定环境下的油田仓库选址问题

油田工作中,合理的仓库选址决策不仅能节约物流成本,而且能提高油田作业效率。现有研究通常基于当前的油井位置(简称井位),没有考虑未来井位变化对仓库选址的影响。同时井位受到地下储层条件及油气公司远景规划等因素影响,未来的井位具有很强的不确定性。此外,仓库选址决策属中长期决策,将长期影响油田的物流费用、管理工作甚至开发工作,而且油田生产要求仓库能持续供应物资,所以油田仓库选址应考虑井位的不确定性和仓库服务中断等因素。本文首先根据油田井位分布和钻井规划采用随机模拟方法模拟未来井位,建立并求解考虑设施中断的离散选址模型。然后以鄂南油区物资仓库选址问题为例,模拟井位并求解仓库选址问题,从8个候选点中选出3个建库/租库。最后,分析井位和需求量变化对仓库选址结果的影响。井位不确定环境下油田物资仓库选址问题的研究,不仅对油田物流系统管理的研究具有一定的理论意义,也对油田的物流决策有重要的现实意义。     

Two storage inventory problem with dynamic demand and interval valued lead-time over finite time horizon under inflation and time-value of money

A finite time horizon inventory problem for a deteriorating item having two separate warehouses, one is a own warehouse (OW) of finite dimension and other a rented warehouse (RW), is developed with interval-valued lead-time under inflation and time value of money. Due to different preserving facilities and storage environment, inventory holding cost is considered to be different in different warehouses. The demand rate of item is increasing with time at a decreasing rate. Shortages are allowed in each cycle and backlogged them partially. Shortages may or may not be allowed in the last cycle and under this circumstance, there may be three different types of model. Here it is assumed that the replenishment cycle lengths are of equal length and the stocks of RW are transported to OW in continuous release pattern. For each model, different scenarios are depicted depending upon the re-order point for the next lot. Representing the lead-time by an interval number and using the interval arithmetic, the single objective function for profit is changed to corresponding multi-objective functions. These functions are maximized and solved by Fast and Elitist Multi-objective Genetic Algorithm (FEMGA). The models are illustrated numerically and the results are presented in tabular form.     

Dominance Criteria for the Capacitated Warehouse Location Problem

The paper examines the capacitated warehouse location problem where fixed costs, generally relating to the installation of warehouses and variable costs, consisting mainly of transportation costs, are minimized. The minimization of each kind of cost drives the solution towards opposite directions with respect to the number of warehouses to be opened/closed. Therefore, dominance criteria between fixed and variable costs are examined. This leads to exact tests as well as greedy heuristics, the latter known in the literature as ADD/DROP techniques.     

Complements and substitutes among locations in the two-stage transshipment problem

This paper considers complementarity and substitutability among locations for a two-stage transshipment problem with locations being factories, warehouses, and demand centers. A direct generalization of properties known for the transportation problem would be that any two locations of different types are complements and any two locations of the same type are substitutes. Examples show that these properties need not hold for pairs of locations that include at least one warehouse. An algorithm of Nagelhout and Thompson (European J. Operational Res. 6 (1981) 149–161) for locating warehouses is based on the incorrect supposition that any two warehouses are substitutes, and an example shows that their algorithm need not generate an optimal solution as claimed. For pairs of locations that do not include a warehouse, complementarity and substitutability properties hold just as in the transportation problem.     

Deterministic inventory model for deteriorating items with capacity constraint and time-proportional backlogging rate

In this paper, a deterministic inventory model for deteriorating items with two warehouses is developed. A rented warehouse is used when the ordering quantity exceeds the limited capacity of the owned warehouse, and it is assumed that deterioration rates of items in the two warehouses may be different. In addition, we allow for shortages in the owned warehouse and assume that the backlogging demand rate is dependent on the duration of the stockout. We obtain the condition when to rent the warehouse and provide simple solution procedures for finding the maximum total profit per unit time. Further, we use a numerical example to illustrate the model and conclude the paper with suggestions for possible future research.     

Capacitated location model with online demand pooling in a multi-channel supply chain

This paper presents a location model that assigns online demands to the capacitated regional warehouses currently serving in-store demands in a multi-channel supply chain. The model explicitly considers the trade-off between the risk pooling effect and the transportation cost in a two-echelon inventory/logistics system. Keeping the delivery network of the in-store demands unchanged, the model aims to minimize the transportation cost, inventory cost, and fixed handling cost in the system when assigning the online demands. We formulate the assignment problem as a non-linear integer programming model. Lagrangian relaxation based procedures are proposed to solve the model, both the general case and an important special case. Numerical experiments show the efficiency of our algorithms. Furthermore, we find that because of the pooling effect the variance of in-store demands currently served by a warehouse is an important parameter of the warehouse when it is considered as a candidate for supplying online demands. Highly uncertain in-store demands, as well as low transportation cost per unit, can make a warehouse appealing. We illustrate with numerical examples the trade-off between the pooling effect and the transportation cost in the assignment problem. We also evaluate the cost savings between the policy derived from the model, which integrates the transportation cost with the pooling effect, and the commonly used policy, which is based only on the transportation cost. Results show that the derived policy can reduce 1.5–7.5% cost in average and in many instances the percentage of cost savings is more than 10%.     

Development of an Air Force Warehouse Logistics Index to continuously improve logistics capabilities

For the effective operation of air power in the modern war, the logistics systems of Air Force warehouses need to be well-maintained. The best logistics system can be established through continuous improvements in logistics capabilities. Although there have been some studies on key performance indicators for logistics capability, they have neither considered the structural relationship among various influential factors, nor the feedback mechanisms in warehouse logistics capabilities. In this study, we propose a structural equations model (SEM) to develop an Air Force Warehouse Logistics Index (WLI). The concept of a Customer Satisfaction Index is used to assess the WLI for strategic improvement plans for various warehouse groups. It is expected that our model can be used to evaluate the logistics support capability of ROKAF (Republic of Korea Air Force) warehouses and contribute to warehouse modernization plans.     

Applying GRASP to solve the multi-item three-echelon uncapacitated facility location problem

This paper considers a production–distribution problem that consists of defining the flow of produced products from manufacturing plants to clients (markets) via a set of warehouses. The problem also consists of defining the location of such warehouses that have unlimited storage capacity. This problem is known in the literature as the three-echelon uncapacitated facility location problem (TUFLP), and is known to be NP-hard when the objective function is to minimize the total cost of warehouse location and production and distribution of products. This paper proposes a Greedy Randomized Adaptive Search Procedure (GRASP) to solve the multi-item version of the TUFLP. Computational experiments are conducted using known instances from the literature. Solutions obtained using GRASP are compared against both optimal solutions and lower bounds obtained using mathematical programming. Results show that proposed algorithm performs well, obtaining good solutions (and even the optimal values) in less computational time than the mixed-integer linear programming model.     

Using a TSP heuristic for routing order pickers in warehouses

In this paper, we deal with the sequencing and routing problem of order pickers in conventional multi-parallel-aisle warehouse systems. For this NP-hard Steiner travelling salesman problem (TSP), exact algorithms only exist for warehouses with at most three cross aisles, while for other warehouse types literature provides a selection of dedicated construction heuristics. We evaluate to what extent reformulating and solving the problem as a classical TSP leads to performance improvements compared to existing dedicated heuristics. We report average savings in route distance of up to 47% when using the LKH (Lin–Kernighan–Helsgaun) TSP heuristic. Additionally, we examine if combining problem-specific solution concepts from dedicated heuristics with high-quality local search features could be useful. Lastly, we verify whether the sophistication of ‘state-of-the-art’ local search heuristics is necessary for routing order pickers in warehouses, or whether a subset of features suffices to generate high-quality solutions.     

A deterministic order level inventory model for deteriorating items with two storage facilities

In this paper a deterministic inventory model is developed for a single deteriorating item which is stored in two different warehouses. A rented warehouse is used to store the excess units over the fixed capacity W of the own warehouse. The rented warehouse is assumed to charge higher unit holding cost than the own warehouse, but to offer a better preserving facility resulting in a lower rate of deterioration for the goods than the own warehouse. The optimal stock level for the beginning of the period is found and the model developed is shown to agree with the order level model for non deteriorating items with a single storage facility. An illustration to show the applicability of the model is also presented.     

A two warehouse inventory model for deteriorating items with a linear trend in demand and shortages

In this paper, we develop a deterministic inventory model with two warehouses (one is the existing storage known as own warehouse (OW) and the other is hired on rental basis known as rented warehouse (RW). The model allows different levels of item deterioration in both warehouses. The demand rate is supposed to be a linear (increasing) function of time and the replenishment rate is infinite. The stock is transferred from RW to OW in continuous release pattern and the associated transportation cost is taken into account. Shortages in OW are allowed and excess demand is backlogged. For the general model, we give the equations for the optimal policy and cost function and we discuss some special cases. A numerical example is given to illustrate the solution procedure of the model. Finally, based on this example, we conduct a sensitivity analysis of the model.     

Single vehicle routing with predefined client sequence and multiple warehouse returns: the case of two warehouses

We examine three interesting cases of the single vehicle routing problem with a predefined client sequence and two load replenishment warehouses. Given the location and demand of the clients, we seek the minimal cost route, which includes optimal load replenishment visits to the warehouses in order to fully satisfy the client demand. The cases studied vary with respect to inventory availability at each warehouse and are of increasing complexity. We have developed solution algorithms that address this complexity, ranging from a standard dynamic programming algorithm for the simplest case, to labeling algorithms and a new partitioning heuristic. The efficiency of these algorithms has been studied by solving a wide range of problem instances, and by comparing the results with those obtained from a state-of-the-art MILP solver.