Quantifying the environmental and economic benefits of cooperation: A case study in temperature-controlled food logistics

Inefficient road transportation causes unnecessary costs and polluting emissions. This problem is even more severe in refrigerated transportation, in which temperature control is used to guarantee the quality of the products. Organizing logistics cooperatively can help decrease both the environmental and the economic impacts. In Joint Route Planning (JRP) cooperation, suppliers and customers jointly optimize routing decisions so that cost and emissions are minimized. Vendor Managed Inventory (VMI) cooperation extends JRP cooperation by optimizing routing and inventory planning decisions simultaneously. However, in addition to their economic advantages, VMI and JRP may also yield environmental benefits. To test this assertion, we perform a case study on cooperation between a number of supermarket chains in the Netherlands. The data of this case study are analyzed to quantify both the economic and environmental benefits of implementing cooperation via JRP and VMI, using vehicle routing and an inventory routing models. We found that JRP cooperation can substantially reduce cost and emissions compared with uncooperative routing. In addition, VMI cooperation can further reduce cost and emissions, but minimizing cost and minimizing emissions no longer result in the same solution and there is a trade-off to be made.     

A hybrid Genetic Algorithm approach to minimize the total joint cost of a single-vendor multi-customer integrated scheduling problem

This paper addresses the scheduling of supply chains with interrelated factories consisting of a single vendor and multiple customers. In this research, one transporter is available to deliver jobs from vendor to customers, and the jobs can be processed by batch. The problem studied in this paper focuses on a real-case scheduling problem of a multi-location hospital supplied with a central pharmacy. The objective of this work is to minimize the total cost, while satisfying the customer’s due dates constraints. A mathematical formulation of the problem is given as a Mixed Integer Programming model. Then, a Branch-and-Bound algorithm is proposed as an exact method for solving this problem, a greedy local search is developed as a heuristic approach, and a hybrid Genetic Algorithm is presented as a meta-heuristic. Computation experiments are conducted to highlight the performance of the proposed methods.     

A carbon footprint-based closed-loop supply chain model under uncertainty with risk analysis: A case study

The management of products’ end-of-life and the recovery of used products has gained significant importance in recent years. In this paper, we address the carbon footprint-based problem that arises in a closed-loop supply chain where returned products are collected from customers. These returned products can either be disposed of or be remanufactured to be resold as new ones. Given this environment, an optimization model for a closed-loop supply chain (CLSC) in which carbon emission is expressed in terms of environmental constraints, i.e., carbon emission constraints, is developed. These constraints aim to limit the carbon emission per unit of product supplied with different transportation modes. Here, we design a closed-loop network where capacity limits, single-item management and uncertainty on product demands and returns are considered. First, fuzzy mathematical programming is introduced for uncertain modeling. Then, the statistical approach to the possibility to synthesize fuzzy information is utilized. Therefore, using a defined possibilistic mean and variance, we transform the proposed fuzzy mathematical model into a crisp form to facilitate efficient computation and analysis. Finally, the risk caused by violating the estimated resource constraints is analyzed so that decision makers (DMs) can trade off between the expected cost savings and the expected risk. We utilize data from a company located in Iran.     

Selection Criteria of Transportation Mode: A Case Study in Four Finnish Industry Sectors

Abstract

This paper takes a closer look at the very basics of logistics and it analyses the selection criteria of transportation services from the industrial point of view as the main research problem. It also tries to establish a better understanding of which industrial sectors are using which mode of logistics services and why. According to the analysis, the high value and especially high price/kg ratio of products, short life cycles and worldwide markets are typical reasons to use rapid modes of transport. The high price/kg ratio of products and the short life cycles, for example in the electronics industry, cause high price erosion and support selecting transport based on speed, as proportional transport costs remain small, even when using expensive transportation modes. Based on the results, some of the future logistics needs were identified, and the aim is to help logistics service providers offer the exact services needed, providing better competitiveness for Finnish shipping companies operating in global markets. Logistics service providers are, for example, expected to have more powerful supply chain management capabilities than a single‐service provider can typically offer. Additionally, logistics service providers should have compatible operating systems with different parties of various supply chains to enable deliveries to different customer groups according to their industry’s required speed.     

A coordinated location-inventory problem in closed-loop supply chain

This paper considers a coordinated location-inventory model under uncertain demands for a closed loop supply chain comprising of one plant, forward and reverse distribution centers, and retailers. The inventory of new and returned products is managed at forward and reverse distribution centers respectively through a periodic review policy. The proposed model determines the location of forward and reverse distribution centers and the associated capacities, the review intervals of the inventory policy at distribution centers, and the assignments of retailers to the distribution centers. We model six different coordination strategies. All the models are formulated as nonlinear integer programs with chance constraints and transformed to conic quadratic mixed-integer programs that can be efficiently solved by CPLEX. An outer approximation based solution algorithm is developed to solve the conic quadratic mixed-integer program. The benefit of different types of coordination strategies is shown through extensive computational testing.     

A decomposition-based iterative optimization algorithm for traveling salesman problem with drone

This study investigates a new delivery problem that has emerged after the attempts of several e-commerce and logistics firms to deploy drones in their operations to increase efficiency and reduce delivery times. In this problem, a delivery truck that carries a drone on its roof serves customers in coordination with a drone. The drone is considered to complement the truck due to its cost-efficiency and ability to access difficult terrains and to travel without exposure to congestion. This study presents an iterative algorithm that is based on a decomposition approach to minimize delivery completion time. In the first stage of the proposed methodology, the truck route and the customers assigned to the drone are determined. In the second stage, a mixed-integer linear programming model is solved to optimize the drone route by fixing the routing and the assignment decisions that are made in the first stage. Beginning with the shortest truck route, the assignment and the routing decisions are iteratively improved. The solution times of our algorithm are compared with the solution times of the state-of-the-art formulations that are solved by CPLEX. The results demonstrate that our algorithm yields shorter solution times for the instances that we generated with the specified parameters. An optimization-based heuristic algorithm, which obtains solutions for medium-sized instances, is developed by reducing the feasible search area.     

Towards a global CO2 calculation standard for supply chains: Suggestions for methodological improvements

Improving the efficiency and sustainability of supply chains is a shared aim of the transport industry, its customers, governments as well as industry organisations. To optimize supply chains and for the identification of best practice, standards for their analysis are needed in order to achieve comparable evaluations. This need for an evaluation standard also applies to CO₂ emission calculations. This research focuses on the transportation within supply chains and possible approaches towards a global standard for calculating its CO₂ emissions. In the recent past, several organisations, national and international, have come forward with possible methods, tools and databases for the calculation of CO₂ emissions along supply chains, but almost all of them do not cover the entire transportation chain. Also standards for CO₂ emissions of products and production in general do exist but they do not take the particular requirements of transportation into consideration. Therefore a global standard specifically for transportation could not yet be introduced. The EN 16258 standard is the only international standard for emission calculation of transportation in supply chains. It was therefore analyzed as a possible starting point for a global standardization approach. Analysis shows it too contains gaps and ambiguities which render comparisons of supply chains difficult. These gaps of the EN 16258 are analyzed, followed by suggestions for methodological improvements for their closure. The research concludes with an outlook on next steps needed towards a global CO₂ calculation standard for transportation within supply chains.     

Developing environmentally sustainable logistics: Exploring themes and challenges from a logistics service providers’ perspective

The purpose of this paper is to explore themes and challenges in developing environmentally sustainable logistical activities.The approach is explorative with a cross sectional design that takes advantage of ten case studies out of selected logistics service providers (LSPs) operating primarily in the Scandinavian countries.The findings illustrate the major themes by analyzing current and future activities in developing environmentally sustainable logistical activities. In addition, four categories of challenges are identified: customer priorities, managerial complexity, network imbalance, and technological and legislative uncertainties. It is concluded that there is a great need for a holistic perspective where LSPs and product owners together analyze and design future logistical setups.The suggested holistic and integrative model, building on a three-dimensional concurrent engineering framework, provides new opportunities for research. Further research is needed to improve the interrelationship between LSPs and their customers in the development of sustainable logistical solutions.This paper puts forward recommendations for the sustainable development of logistics by combining the results from the case studies with a review of related literature. This will be beneficial for managers and policy makers when they approach sustainable logistical challenges. The emergence and synthesis of themes and challenges are critical for a sustainable society.     

Comparison of energy demands of drone-based and ground-based parcel delivery services

Drones are one of the most intensively studied technologies in logistics in recent years. They combine technological features matching current trends in transport industry and society like autonomy, flexibility, and agility. Among the various concepts for using drones in logistics, parcel delivery is one of the most popular application scenarios. Companies like Amazon test drones particularly for last-mile delivery intending to achieve both reducing total cost and increasing customer satisfaction by fast deliveries. As drones are electric vehicles, they are also often claimed to be an eco-friendly mean of transportation.In this paper an energy consumption model for drones is proposed to describe the energy demand for drone deliveries depending on environmental conditions and the flight pattern. The model is used to simulate the energy demand of a stationary parcel delivery system which serves a set customers from a depot. The energy consumed by drones is compared to the energy demand of Diesel trucks and electric trucks serving the same customers from the same depot.The results indicate that switching to a solely drone-based parcel delivery system is not worthwhile from an energetic perspective in most scenarios. A stationary drone-based parcel delivery system requires more energy than a truck-based parcel delivery system particularly in urban areas where customer density is high and truck tours are comparatively short. In rather rural settings with long distances between customers, a drone-based parcel delivery system creates an energy demand comparable to a parcel delivery system with electric trucks provided environmental conditions are moderate.     

Incorporating Logistics in Freight Transport Demand Models: State-of-the-Art and Research Opportunities

Freight transport demand is a demand derived from all the activities needed to move goods between locations of production to locations of consumption, including trade, logistics and transportation. A good representation of logistics in freight transport demand models allows us to predict the effects of changes in logistics systems on future transport flows. As such it provides better estimations of the costs of interaction and allows to predict changes in spatial patterns of freight transport flows more accurately. In recent years, the attention for freight modelling has been growing and new research work has appeared aimed at incorporating logistics in freight models. In this paper we review the state of the art in the representation of logistics considerations in freight transport demand models. Our focus is on the service and cost drivers of changes in logistics networks and how these affect freight transport. Our review proceeds along a conceptual framework for modelling that goes beyond the conventional 4-step modelling approach. We identify promising areas for freight modelling that have an integrative function within this framework, such as spatial computable general equilibrium models, supply chain choice models and hypernetwork models.     

Assessing carbon footprint and energy efficiency in competing supply chains: Review - Case studies and benchmarking

This article compares the energy consumption and CO₂ emissions of supply chains in Belgium, France and UK looking in particular at, jeans, yogurts, apples, tomatoes and furniture. We use a generic methodology that allows comparability across the supply chain of products, supply chains, and countries. Our benchmarking show relatively high emissions for maritime transport and the consumer leg, while logistics activities such as storage and road freight exhibit relatively low emissions. The influences of distance, retail type, area density and consumer behaviour are also examined.     

Understanding the impact of e-commerce on last-mile light goods vehicle activity in urban areas: The case of London

Growth in e-commerce has led to increasing use of light goods vehicles for parcel deliveries in urban areas. This paper provides an insight into the reasons behind this growth and the resulting effort required to meet the exacting delivery services offered by e-retailers which often lead to poor vehicle utilisation in the last-mile operation, as well as the duplication of delivery services in urban centres as competitors vie for business. A case study investigating current parcel delivery operations in central London identified the scale of the challenge facing the last-mile parcel delivery driver, highlighting the importance of walking which can account for 62% of the total vehicle round time and 40% of the total round distance in the operations studied. The characteristics of these operations are in direct conflict with the urban infrastructure which is being increasingly redesigned in favour of walking, cycling and public transport, reducing the kerbside accessibility for last-mile operations. The paper highlights other pressures on last-mile operators associated with managing seasonal peaks in demand; reduced lead times between customers placing orders and deliveries being made; meeting delivery time windows; first-time delivery failure rates and the need to manage high levels of product returns. It concludes by describing a range of initiatives that retailers and parcel carriers, sometimes in conjunction with city authorities, can implement to reduce the costs associated with last-mile delivery, without negatively impacting on customer service levels.     

An RFID-based inventory management framework for emergency relief operations

In the aftermath of super storm Sandy, a large region from North Carolina to Maine endured food shortages, power outages, and long lines at gas stations forced to ration fuel due to low supply and high demand. These issues were largely the result of the affected transportation network’s inability to effectively cope with random and highly dynamic changes, and a lack of available resources and suppliers who were capable of enacting adequate emergency response measures. These problems experienced during super storm Sandy further underscored the need for a robust emergency inventory management system, where planning policies can be integrated with real-time on-line inventory management strategies to keep track of fluctuations of vital commodities such as food, water, medicine, fuel and power supplies. Motivated by this important problem, this paper investigates a comprehensive feedback-based emergency management framework for disasters such as super storm Sandy that provides integration with an emerging intelligent transportation systems technology, namely Radio Frequency Identification Devices (RFID). Within this framework, the offline-planning problem is solved by the stochastic humanitarian inventory management approach; and the online modeling strategy includes the application of a continuous time model predictive control technique. After introducing the mathematical background, the proposed framework is discussed using case studies built based on super storm Sandy in order to understand the efficiency and practicality of this RFID-based methodology. Results suggest that the methodology can properly account for and react to the rapidly changing needs for vital supplies that occur during the emergency relief operations. Based on this approach, planners and decision makers can be aware of the time delay that can happen due to disaster-related disruptions and thus maintain a safe level of buffer for vital supplies.     

A single-period analysis of a two-echelon inventory system with dependent supply uncertainty

Disruptions and random supplies have been important sources of uncertainty that should be considered in the design and control of supply chains. There have been many real world examples in which a single catastrophic event has simultaneously degraded the capabilities of several suppliers leading to considerable erosion of profits and goodwill for a company. However, the literature on analytical models that account for the dependence nature of disruptions and its impact on supply chain performance is sparse.In this paper, we consider an m-manufacturer, 1-retailer, newsvendor inventory system with stochastically dependent manufacturing capacities, caused by random disruptions that may simultaneously inflict damages to the capacities of the manufacturers. We develop the structural/analytical properties of key performance measures and optimal inventory policies for the multi-source and assembly inventory systems. We show that stochastic dependence in disruptions can have opposite effects on system performance in the multi-source and assembly systems. While risk diversification is preferred in the multi-source system, risk concentration is preferred in the assembly system. Our results also suggest that, if the retailer ignores the effect of dependent disruptions, then in the multi-source structure, it would underestimate the cost, overestimate the fill rate, and order more units than the optimum; however, in the assembly structure, the opposite would happen. We perform a comprehensive numerical study to validate our analytical results and generate useful managerial and operational insights for effective risk management of supply chains in the presence of dependent supply uncertainty.     

Estimating economic losses of industry clusters due to port disruptions

Seaport operations are highly important for industries which rely heavily on imports and exports. A reliable evaluation of port risks is essential to govern the normal running of seaborne transportation and thus the industrial economies. The occurrence of a breakdown in the trade facilitators, such as ports, will disrupt the smooth flow of supply chains for the industries. The estimation of the economic loss for an industry when a port gets disrupted is a challenging task as the relationship between the port and industry clusters is complex. This study aims to develop a systematic framework for performing economic loss estimation of industry clusters due to port disruptions. The whole risk assessment is split into three stages focusing on the establishment of a network flow model, economic estimations and evaluating risk mitigation strategies. The proposed idea is demonstrated by a case study on Shenzhen port and its related manufacturing industries. A dynamic inventory control strategy used by manufacturers is found to be beneficial for mitigating port disruption risks.     

Joint inventory-location problem under the risk of probabilistic facility disruptions

This paper studies a reliable joint inventory-location problem that optimizes facility locations, customer allocations, and inventory management decisions when facilities are subject to disruption risks (e.g., due to natural or man-made hazards). When a facility fails, its customers may be reassigned to other operational facilities in order to avoid the high penalty costs associated with losing service. We propose an integer programming model that minimizes the sum of facility construction costs, expected inventory holding costs and expected customer costs under normal and failure scenarios. We develop a Lagrangian relaxation solution framework for this problem, including a polynomial-time exact algorithm for the relaxed nonlinear subproblems. Numerical experiment results show that this proposed model is capable of providing a near-optimum solution within a short computation time. Managerial insights on the optimal facility deployment, inventory control strategies, and the corresponding cost constitutions are drawn.     

A complex network approach to understand commercial vehicle movement

We introduce complex network analysis and use a commercial vehicle’s observed trip as a proxy for a business relation between two facilities in its activity chain. We extract facility locations by applying density-based clustering to GPS data of commercial vehicle activities. The network among the facilities is then extracted by analysing the activity chains of more than 25,000 commercial vehicles. Centrality metrics prove useful and novel in identifying and locating key logistics players. Transport planners and decision makers can benefit from such an approach as it allows them to design more targeted initiatives and policy interventions.     

Measuring supply chain efficiency based on a hybrid approach

Supply chain management has a tremendous impact on the success of a company. One of the critical issues for gaining competitive advantages for companies is improving supply chain performance. Most studies about the application of Data Envelopment Analysis (DEA) Supply chain models do not identify the benchmarking units for inefficient supply chains. On the other, measuring the short run and long run of the supply chain efficiency is another challenge for decision makers in supply chain management. Hence, we propose a methodology of DEA for measuring of the supply chain. We integrated two approaches as special cases of the hybrid model and compare the short and long run strategies of supply chain and can be identified benchmarking.     

The performance of route modification and demand stabilization strategies in stochastic vehicle routing

A key concern in managing vehicle routing operations under stochastic demands is whether, on the basis of travel distance, route modification yields materially greater logistical efficiency than fixed routes. This research uses statistical calibration as the primary technique to develop a robust and tractable model for estimating this difference in logistical efficiency. Based on features such as the models predictive accuracy and generalizability, it constitutes a substantive improvement over existing models. The present study also expands the range of predictive models relevant to vehicle routing under stochastic demands with models to estimate the transportation and inventory effects of persuading customers to stabilize their ordering patterns.     

Robust optimization for emergency logistics planning: Risk mitigation in humanitarian relief supply chains

This paper proposes a methodology to generate a robust logistics plan that can mitigate demand uncertainty in humanitarian relief supply chains. More specifically, we apply robust optimization (RO) for dynamically assigning emergency response and evacuation traffic flow problems with time dependent demand uncertainty. This paper studies a Cell Transmission Model (CTM) based system optimum dynamic traffic assignment model. We adopt a min–max criterion and apply an extension of the RO method adjusted to dynamic optimization problems, an affinely adjustable robust counterpart (AARC) approach. Simulation experiments show that the AARC solution provides excellent results when compared to deterministic solution and sampling based stochastic programming solution. General insights of RO and transportation that may have wider applicability in humanitarian relief supply chains are provided.