Build-to-order supply chain network design under supply and demand uncertainties

Supply chain disruptions are unintended, unwanted situations resulting in a negative supply chain performance. We study the supply chain network design under supply and demand uncertainty with embedded supply chain disruption mitigation strategies, postponement with downward substitution, centralized stocking and supplier sourcing base. We designed an integrated supply-side, manufacturing and demand-side operations network in such that the total expected operating cost is minimized. We modeled it in a deterministic equivalent formulation. An L-shaped decomposition with an additional decomposition step in the master problem is proposed. The computational results showed that parallel sourcing has a cost advantage against single sourcing under supply disruptions. In addition, the build-to-order (BTO) manufacturing mitigation process has its greatest impact with high variations on demands and is integrated with the component downward substitution. Lastly, the manufacturer needs to order differentiated components to cover its requirement for maximal product demand to prevent the loss of sale, even with fewer modules in stock.     

Competition and disruption in a dynamic urban supply chain

Rapid changes and complexities in business environments have stressed the importance of interactions between partners and competitors, leading supply chains to become the most important element of contemporary business environments. There is a concomitant need for foresight in describing supply chain performance in all operating environments, including those involving punctuated disruptions. Furthermore, the urban metropolis is now widely recognized to be an environment which is especially vulnerable to supply chain disruptions and for which integrated supply chain decisions can produce very substantial net benefits. Accordingly, this paper presents a dynamic supply chain network model formulated as a differential variational inequality; the model is fashioned to allow consideration of supply chain disruption threats to producers, freight carriers, and retail enterprises. The DVI is solved using a fixed-point algorithm, and a simple numerical example, introduced to illustrate how the impacts of supply chain disruptions may be quantified, is presented.     

Product substitution and dual sourcing under random supply failures

Product substitution can mitigate supply chain disruptions. However, it may not be very effective without multiple sourcing. In this paper, we consider a supply chain with two downward substitutable products. The products can be ordered from an unreliable supplier or a reliable but more expensive supplier. It is found that in an optimal sourcing policy the higher-grade product should be preferred over the lower-grade product. A sufficient condition is given for an optimal policy where only the higher-grade product is dual-sourced. The effect of substitution is contrasted with the non-substitution case. Numerical study shows the impact of demand variability and correlation on the effect of product substitution and the corresponding optimal sourcing policy.     

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.     

Designing a supply chain resilient to major disruptions and supply/demand interruptions

Global supply chains are more than ever under threat of major disruptions caused by devastating natural and man-made disasters as well as recurrent interruptions caused by variations in supply and demand. This paper presents a hybrid robust-stochastic optimization model and a Lagrangian relaxation solution method for designing a supply chain resilient to (1) supply/demand interruptions and (2) facility disruptions whose risk of occurrence and magnitude of impact can be mitigated through fortification investments. We study a realistic problem where a disruption can cause either a complete facility shutdown or a reduced supply capacity. The probability of disruption occurrence is expressed as a function of facility fortification investment for hedging against potential disruptions in the presence of certain budgetary constraints. Computational experiments and thorough sensitivity analyses are completed using some of the existing widely-used datasets. The performance of the proposed model is also examined using a Monte Carlo simulation method. To explore the practical application of the proposed model and methodology, a real world case example is discussed which addresses mitigating the risk of facility fires in an actual oil production company. Our analysis and investigation focuses on exploring the extent to which supply chain design decisions are influenced by factors such as facility fortification strategies, a decision maker's conservatism degree, demand fluctuations, supply capacity variations, and budgetary constraints.     

The role of travel demand and network centrality on the connectivity and resilience of an urban street system

In the transportation literature, two major and parallel approaches exist to identify the critical elements of a transportation system. On the one hand, conventional transportation engineering emphasizes travel demand, often in terms of traffic volume (i.e., demand side). On the other hand, newer techniques from Network Science emphasize network topology (i.e., supply side). To better understand the relationship between the two approaches, we first investigate whether they correlate by comparing traffic volume and node centrality. Second, we assess the impact of the two approaches on the connectivity and resilience of a transportation network; connectivity is measured by the relative size of the giant component, and resilience is measured by the network’s adaptive capacity (the amount of extra flow it can handle). The urban road system of Isfahan (Iran) is used as a practical case study. Overall, we find that traffic volume indeed correlates with node centrality. In addition, we find that the weighted degree of a node, i.e., the sum of the capacities of its incident links (for small disruptions) and node betweenness (for large disruptions), best captures node criticality. Nodes with high weighted degree and betweenness should therefore be given higher priority to enhance connectivity and resilience in urban street systems. Regarding link criticality, roads with higher capacities showed a more important role as opposed to betweenness, flow, and congestion.

     

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.     

Strategies for customer service level protection under multi-echelon supply chain disruption risk

We model a multi-echelon system where disruptions can occur at any stage and evaluate multiple strategies for protecting customer service if a disruption should occur. The strategies considered take advantage of the network itself and include satisfying demand from an alternate location in the network, procuring material or transportation from an alternate source or route, and holding strategic inventory reserves throughout the network. Unmet demand is modeled using a mix of backordering and lost sales. We conduct numerical analysis and provide recommendations on selecting strategic mitigation methods to diminish the impact of disruptions on customer service. We demonstrate that the greatest service level improvements can be made by providing both proactive inventory placement to cover short disruptions or the start of long disruptions, and reactive back-up methods to help the supply chain recover after long or permanent disruptions.     

Disruption risk management in railroad networks: An optimization-based methodology and a case study

We propose an optimization-based methodology for recovery from random disruptions in service legs and train services in a railroad network. A network optimization model is solved for each service leg to evaluate a number of what-if scenarios. The solutions of these optimization problems are then used in a predictive model to identify the critical disruption factors and accordingly design a suitable mitigation strategy. A mitigation strategy, such as adding flexible or redundant capacity in the network, is an action that is deliberately taken by management in order to hedge against the cost and impact of disruption if it occurs. It is important that managers consider the trade-offs between the cost of mitigation strategy and the expected cost of disruption. The proposed methodology is applied to a case study built using the realistic infrastructure of a railroad network in the mid-west United States. The resulting analysis underscores the importance of accepting a slight increase in pre-disruption transportation costs, which in turn will enhance network resiliency by building dis-similar paths for train services, and by installing alternative links around critical service legs.     

TransNIEMO: economic impact analysis using a model of consistent inter-regional economic and network equilibria

We describe a model that integrates a multiregional input–output (I–O) model of the USA (for 50 States and the District of Columbia) with the national highway network. Inter-state commodity shipments are placed on a congestible highway network. Simulations of major choke-point disruptions redirect traffic which increases the costs of some shipments. Increased costs show up in higher prices which help to determine a new I–O equilibrium. We find economic and network equilibria that are consistent. The simulations show only moderate economic impacts. We ascribe this to the resilience of the highway network. The model provides State-level detail on who bears the costs of the disruptions.     

Parking permits management and optimal parking supply considering traffic emission cost

Given a many-to-one bi-modal transportation network where each origin is connected to the destination by a bottleneck-constrained highway and a parallel transit line, we investigate the parking permit management methods to minimize traffic time cost and traffic emission cost simultaneously. More importantly, the optimal supply of parking spots is also discussed in the policies of parking permit. First, we derive the total travel costs and emission costs for the two cases of sufficient and insufficient parking spot provisions at the destination. Second, we propose a bi-objective model and solve the Pareto optimal parking permit distribution, given a certain level of parking supply. Third, we investigate the optimal parking supply in the policy of parking permit distribution, with the objectives of minimizing both total travel cost and traffic emission. Fourth, we provide a model of optimizing parking supply, in the policy of free trading of parking permits. Finally, the numerical examples are presented to illustrate the effectiveness of these schemes, and the numerical results show that restricting parking supply at the city center could be efficient to reduce traffic emission.     

On the existence of stationary states in general road networks

Our daily driving experience and empirical observations suggest that traffic patterns in a road network are relatively stationary during peak periods. In numerous transportation network studies, there has been an implicit conjecture that stationary states exist in a network when origin demands, route choice proportions, and destination supplies are constant. In this study, we first rigorously formulate the conjecture within the framework of a network kinematic wave theory with an invariant junction model. After defining stationary states, we derive a system of algebraic equations in 3-tuples of stationary link flow-rates, demands, and supplies. We then introduce a new definition of junction critical demand levels based on effective demands and supplies. With a map in critical demand levels, we show that its fixed points and, therefore, stationary states exist with the help of Brouwer’s fixed point theorem. For two simple road networks, we show that the map is well-defined and can be used to solve stationary states with a brute-force method. Finally we summarize the study and present some future extensions and applications.     

The multi-objective railway timetable rescheduling problem

Unexpected disruptions occur for many reasons in railway networks and cause delays, cancelations, and, eventually, passenger inconvenience. This research focuses on the railway timetable rescheduling problem from a macroscopic point of view in case of large disruptions. The originality of our approach is to integrate three objectives to generate a disposition timetable: the passenger satisfaction, the operational costs and the deviation from the undisrupted timetable. We formulate the problem as an Integer Linear Program that optimizes the first objective and includes $\epsilon$-constraints for the two other ones. By solving the problem for different values of $\epsilon$, the three-dimensional Pareto frontier can be explored to understand the trade-offs among the three objectives. The model includes measures such as canceling, delaying or rerouting the trains of the undisrupted timetable, as well as scheduling emergency trains. Furthermore, passenger flows are adapted dynamically to the new timetable. Computational experiments are performed on a realistic case study based on a heavily used part of the Dutch railway network. The model is able to find optimal solutions in reasonable computational times. The results provide evidence that adopting a demand-oriented approach for the management of disruptions not only is possible, but may lead to significant improvement in passenger satisfaction, associated with a low operational cost of the disposition timetable.     

Achieving sustainable development of supply chain by incorporating various carbon regulatory mechanisms

Nowadays, sustainability issues have received considerable attention in supply chain management because of the governmental requirements as well as expectations of the people. This paper introduces a novel supply chain network design problem to cover three dimensions of sustainability, namely economic, environmental, and social. The advantage of the presented model stems from considering the booming development aligned with reduction in environmental impact. In this paper, to achieve the mentioned benefits and to derive a more sustainable supply chain, a novel model in the presence of the most commonly used carbon policies is proposed. This paper, addresses sustainable development through imposing proper carbon regulatory mechanisms. Main contribution of this study is to consider the effect of imposing carbon policies on environmental advantages as well as improving the regional development level in a supply chain network design problem. Moreover, the shipment consolidation decisions are utilized to reduce cost as well as environmental impact. In addition, a novel mixed uncertainty approach is proposed to capture the uncertain emission parameters. The numerical examples and a case study are analyzed to evaluate the performance of the proposed models. It is concluded that, a high-growth economy with low-carbon can be made and also almost global well-being of people is ensured by applying the proposed model. Some managerial insights are provided for the enterprises of supply chains to make the most appropriate sustainable decisions. Finally, proper carbon emission policies are suggested based on the region sustainability characteristics.     

Planning for the unexpected: The value of reserve capacity for public transport network robustness

Public transport networks (PTN) are subject to recurring service disruptions. Most studies of the robustness of PTN have focused on network topology and considered vulnerability in terms of connectivity reliability. While these studies provide insights on general design principles, there is lack of knowledge concerning the effectiveness of different strategies to reduce the impacts of disruptions. This paper proposes and demonstrates a methodology for evaluating the effectiveness of a strategic increase in capacity on alternative PTN links to mitigate the impact of unexpected network disruptions. The evaluation approach consists of two stages: identifying a set of important links and then for each identified important link, a set of capacity enhancement schemes is evaluated. The proposed method integrates stochastic supply and demand models, dynamic route choice and limited operational capacity. This dynamic agent-based modelling of network performance enables to capture cascading network effects as well as the adaptive redistribution of passenger flows. An application for the rapid PTN of Stockholm, Sweden, demonstrates how the proposed method could be applied to sequentially designed scenarios based on their performance indicators. The method presented in this paper could support policy makers and operators in prioritizing measures to increase network robustness by improving system capacity to absorb unexpected disruptions.     

Green supply chain network design to reduce carbon emissions

We consider a supply chain network design problem that takes CO₂ emissions into account. Emission costs are considered alongside fixed and variable location and production costs. The relationship between CO₂ emissions and vehicle weight is modeled using a concave function leading to a concave minimization problem. As the direct solution of the resulting model is not possible, Lagrangian relaxation is used to decompose the problem into a capacitated facility location problem with single sourcing and a concave knapsack problem that can be solved easily. A Lagrangian heuristic based on the solution of the subproblem is proposed. When evaluated on a number of problems with varying capacity and cost characteristics, the proposed algorithm achieves solutions within 1% of the optimal. The test results indicate that considering emission costs can change the optimal configuration of the supply chain, confirming that emission costs should be considered when designing supply chains in jurisdictions with carbon costs.     

Sustainable cold supply chain management under demand uncertainty and carbon tax regulation

Increasing awareness of sustainability in supply chain management has prompted organizations and individuals to consider environmental impacts when managing supply chains. The issues concerning environmental impacts are significant in cold supply chains due to substantial carbon emissions from storage and distribution of temperature-sensitive product. This paper investigates the impact of carbon emissions arising from storage and transportation in the cold supply chain in the presence of carbon tax regulation, and under uncertain demand. A two-stage stochastic programming model is developed to determine optimal replenishment policies and transportation schedules to minimize both operational and emissions costs. A matheuristic algorithm based on the Iterated Local Search (ILS) algorithm and a mixed integer programming is developed to solve the problem in realistic sizes. The performance and robustness of the matheuristic algorithm are analyzed using test instances in various sizes. A real-world case study in Queensland, Australia is used to demonstrate the application of the model. The results highlight that higher emissions price does not always contribute to the efficiency of the cold supply chain system. Furthermore, the analyses indicate that using heterogeneous fleet including light duty and medium duty vehicles can lead to further cost saving and emissions reduction.     

Price of anarchy for non-atomic congestion games with stochastic demands

We generalize the notions of user equilibrium, system optimum and price of anarchy to non-atomic congestion games with stochastic demands. In this generalized model, we extend the two bounding methods from Roughgarden and Tardos (2004) and Correa et al. (2008) to bound the price of anarchy, and compare the upper bounds we have obtained. Our results show that the price of anarchy depends not only on the class of cost functions but also demand distributions and, to some extent, the network topology. The upper bounds are tight in some special cases, including the case of deterministic demands.     

Traveler delay costs and value of time with trip chains, flexible activity scheduling and information

The delay costs of traffic disruptions and congestion and the value of travel time reliability are typically evaluated using single trip scheduling models, which treat the trip in isolation of previous and subsequent trips and activities. In practice, however, when activity scheduling to some extent is flexible, the impact of delay on one trip will depend on the actual and predicted travel time on itself as well as other trips, which is important to consider for long-lasting disturbances and when assessing the value of travel information. In this paper we extend the single trip approach into a two trips chain and activity scheduling model. Preferences are represented as marginal activity utility functions that take scheduling flexibility into account. We analytically derive trip timing optimality conditions, the value of travel time and schedule adjustments in response to travel time increases. We show how the single trip models are special cases of the present model and can be generalized to a setting with trip chains and flexible scheduling. We investigate numerically how the delay cost depends on the delay duration and its distribution on different trips during the day, the accuracy of delay prediction and travel information, and the scheduling flexibility of work hours. The extension of the model framework to more complex schedules is discussed.     

Short-term shift setting and manpower supplying under stochastic demands for air cargo terminals

A good air cargo terminal manpower supply plan helps terminals deal efficiently with their cargos and reduces their operating costs. To design a good air cargo terminal manpower supply plan, a terminal has to consider not only its operating costs, but also the uncertainty of the manpower demand in actual operations. However, most air cargo terminals in Taiwan currently depend on staff experience with a fixed demand when establishing the manpower supply plan, which is neither effective nor efficient. We have developed two stochastic-demand manpower supply plan models for air cargo terminals that can resolve stochastic demands occurring in practice. The objectives of both models are to minimize the total man-hour cost, subject to the related operating constraints. The models are formulated as integer/mixed integer linear programs. To evaluate the two stochastic-demand models under stochastic demands, we have also developed two deterministic-demand manpower supply plan models, by suitably modifying two stochastic-demand models, respectively, and an evaluation method. Here, we perform a case study using real operating data from a Taiwan air cargo terminal. The preliminary results are good, showing that the models could be useful for planning air cargo terminal manpower supply.