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Strategic Inventory Placement In Large Scale Multi Echelon Networks
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Book Synopsis Strategic Inventory Placement in Large-Scale Multi-Echelon Networks by : Josef Svoboda
Download or read book Strategic Inventory Placement in Large-Scale Multi-Echelon Networks written by Josef Svoboda and published by . This book was released on 2022 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: The placement and sizing of safety stocks in supply chains pose a challenging optimization problem. State-of-the-art multi-echelon inventory optimization models, such as the guaranteed-service approach, are non-linear and depend on statistical, time-series-based approaches that require distributional and parametric assumptions. We propose a data-driven, non-parametric and distribution-free approach for safety stock planning in multi-echelon inventory networks that utilizes historical demand and feature data. We extend data-driven optimization in inventory control from newsvendor models to multi-period and multi-echelon problems. Our model accommodates general, acyclic multi-echelon networks and simultaneously determines safety stock allocation and sizing by setting cost-optimal base stocks for all stages under consideration of service requirements. By developing a mixed-integer programming formulation and a Benders decomposition method, we offer a novel methodological approach to a well-studied problem that can be solved with commercial mathematical programming solvers. We also provide a probabilistic analysis of the data-driven performance relative to an oracle solution when sample data is limited. We show that the mixed integer programming approach is scalable by solving 38 large-scale supply chain benchmark networks with assembly, distribution, and general structures.
Book Synopsis Strategic Inventory Placement in Multi-echelon Supply Chains by : Tor Ivar Schoenmeyr
Download or read book Strategic Inventory Placement in Multi-echelon Supply Chains written by Tor Ivar Schoenmeyr and published by . This book was released on 2008 with total page 137 pages. Available in PDF, EPUB and Kindle. Book excerpt: (cont.) In a case study, we obtained data from the supply chain of an electronic test system, as well as characterized the forecasting process. We found that incorporating the forecast process led to 25% reduction of safety stocks.
Book Synopsis Inventory Positioning for a Multi-echelon Distribution Network by : Deepak Avari
Download or read book Inventory Positioning for a Multi-echelon Distribution Network written by Deepak Avari and published by . This book was released on 2009 with total page 150 pages. Available in PDF, EPUB and Kindle. Book excerpt: This thesis presents a framework for deciding which products to centralize in a regional distribution center and which products to store decentralized close to the customer sites, for each facility in a multi-echelon distribution network. Our research specifically focuses on developing an optimization model to determine the inventory positioning strategy that minimizes total costs. The model considers both inbound and outbound transportation costs along with inventory holding costs at all facilities in the network. The total cost and responsiveness of the optimal solution are compared with the baseline network, in which inventory is completely decentralized. Our analysis is performed using several products that have diverse characteristics, in terms of demand patterns, lead-times, product costs, service-level requirements, transportation modes, and supplier locations. A sensitivity analysis is performed to study how a variance in these parameters affects the optimal solution. The research suggests that for high volume commodity items the benefits of centralization are highly dependent upon the degree of lane consolidation. However, for low volume specialty items, centralization can provide immediate benefits with no change to the existing transportation network.
Book Synopsis Inventory Management in Multi-Echelon Networks by : Christopher Grob
Download or read book Inventory Management in Multi-Echelon Networks written by Christopher Grob and published by Springer. This book was released on 2018-08-14 with total page 153 pages. Available in PDF, EPUB and Kindle. Book excerpt: Inventory Management in Multi-Echelon Networks presents methods to plan inventory in distribution networks. By holistically looking at the supply chain, it shows how safety stocks across all echelons can be optimized if inventory of all levels is taken into consideration. The gap between the existence of advanced inventory planning methods and their low penetration in the industry was the motivation for this book. Christopher Grob develops essential algorithms that companies can use for network inventory planning and highlights achievable implementation benefits. The work of the author was inspired by the needs of an after sales supply chain of a large automotive company. This company supplies customers all over the world with spare parts and operates a distribution network with more than 100 warehouses. This supply chain faces two particular challenges: demand is highly uncertain and customers expect a high service level. About the Author Christopher Grob works in after sales supply chain management at a major German automotive company. He is responsible for the functional development of inventory planning systems for the spare parts business. He is an expert in the field of inventory management.
Book Synopsis Strategic Models for Designing Multi-echelon Inventory Networks with Finite Repair Capacity and Capabilities by : Ben David Van Roo
Download or read book Strategic Models for Designing Multi-echelon Inventory Networks with Finite Repair Capacity and Capabilities written by Ben David Van Roo and published by . This book was released on 2007 with total page 182 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Inventory Positioning Strategies in Multi-echelon Distribution Systems by : Peter Michael Arnold
Download or read book Inventory Positioning Strategies in Multi-echelon Distribution Systems written by Peter Michael Arnold and published by . This book was released on 1992 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Multi-echelon Inventory Strategies for a Retail Replenishment Business Model by : Benjamin Michael Polak
Download or read book Multi-echelon Inventory Strategies for a Retail Replenishment Business Model written by Benjamin Michael Polak and published by . This book was released on 2014 with total page 69 pages. Available in PDF, EPUB and Kindle. Book excerpt: The mission of the Always Available retail replenishment business at NIKE is to ensure consumer-essential products are in-stock at retailers at all times. To achieve this goal, NIKE has developed a forecast-driven, make-to-stock supply chain model which allows retailers to place weekly orders to an on-hand inventory position in a distribution center. The challenge facing the business is how to design an inventory strategy that achieves a high level of service to its customers while minimizing inventory holding cost. Specifically, safety stock holding cost is targeted as it accounts for the majority of on-hand inventory and can be reduced without significantly impacting the underlying supply chain architecture. This thesis outlines the application of multi-echelon inventory optimization in a retail replenishment business model. This technique is used to determine where and how much safety stock should be staged throughout the supply chain in order to minimize safety stock holding cost for a fixed service level. Provided a static supply chain network, the ideal safety stock locations and quantities which result in minimal total safety stock holding cost is determined. For this business, the optimal solution is to stage lower-cost component materials with long supplier lead times and high commonality across multiple finished goods at the manufacturer in addition to finished goods at the distribution centers. Safety stock holding cost reduction from component staging increases significantly when the distance between manufacturers and the distribution center decreases and for those factories producing a variety of finished goods made from the same component materials due to inventory pooling. Forecast accuracy drives the quantity of safety stock in the network. The removal of low volume, highly unpredictable products from the portfolio yields significant inventory holding cost savings without a detrimental impact to revenue. By deploying the optimal safety stock staging solution and by removing unpredictable products, this analysis shows that finish goods safety stock inventory would be reduced by 35% for the modeling period (calendar year 2012) while only decreasing topline revenue by 5%.
Book Synopsis Strategic Inventory Management in an Aerospace Supply Chain by : Joseph Peter Mauro
Download or read book Strategic Inventory Management in an Aerospace Supply Chain written by Joseph Peter Mauro and published by . This book was released on 2008 with total page 80 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper introduces multiple methods to set and optimize inventory levels. These methods are then classified based on the complexity involved to implement them. As an organization develops a deeper understanding of inventory, it becomes more mature and can apply more complex methods. This sequencing of methods is defined as a three phase maturity model. First, a foundational level of maturity is defined, which quantifies inventory levels based on future demand and business requirements. Second, a transitional level of maturity defines safety stock positioning in a single-echelon supply chain. Finally, the maturity model concludes with an optimal level of maturity that is based on principles of multi-echelon inventory optimization: safety stock at multiple positions of a supply chain. The setting for this paper was the Aerospace industry. Honeywell Aerospace is in the middle of a 3-year effort to re-engineer Sales, Inventory and Operations Planning (SIOP) systems. At the same time, Honeywell Aerospace is standardizing on a uniform implementation of an ERP system. Through SIOP, standard inventory and planning practices aided by the uniform ERP backbone and a strategic inventory program executive management hopes to reduce what is seen as a disproportionate contribution of inventory to Honeywell International.
Book Synopsis Developing a Long Term Strategy for a Warehouse Network by : Patrick Allen Johnson
Download or read book Developing a Long Term Strategy for a Warehouse Network written by Patrick Allen Johnson and published by . This book was released on 2017 with total page 68 pages. Available in PDF, EPUB and Kindle. Book excerpt: This thesis addresses the question of how to create a pro-active, long term, network centric warehouse strategy. This thesis will present an inventory model built to understand the capacity needs of Amgen's warehouses over the time period of 2017-2023 to support this mission, along with recommendations based on scenario analysis from this model to analyze and quantify the impacts of multiple scenarios in support of an efficient, effective, nimble supply chain. With worldwide operations supporting a global customer base, Amgen's operational philosophy is to ensure serving "every patient, every time". Amgen's warehouses play a vital role with this mission, storing raw materials to ensure production with safety stock and various levels of Work in Progress (WIP) based not only on operational safety stock, but also strategic safety stock to ensure demand is always met, even with unforeseen risks. In order to understand the impacts of growth on warehouse utilization, a relational database inventory model was created and linked to the long range forecast of supply and demand. This inventory model linked the Bill of Materials (BOMs) to the product forecast in order to to understand the quantity of raw materials required to meet the supply. The database also calculates the WIP and finished product levels of Amgen's products. This model considers inefficiencies in the warehouses, as warehouse pallet spaces do not always store the maximum capacity of the material. This inventory model calculated the capacity required for each warehouse over the forecasted ranges of FY 2016 to FY 2023. The findings of this model were used to create Amgen's long term warehouse strategy. The model demonstrated a +- 10% accuracy to 2017 planning. We developed a strategy that mimics Amgen's operational strategy. Amgen's operational strategy is to reduce fixed costs, and focus on flexibility with variable based costs. Based on this, we found the best strategy was to work with 3rd party logistics providers (3PLs) to mitigate the capacity gaps in a variable based manner. This option is preferred over investing in expanding capacity at warehouses already in use for all three scenarios of optimistic, baseline, and pessimistic demand profiles. The biggest lever to gain warehouse capacity is to improve inventory policies and the flow of communication. Inventory policies whose aim is to reduce inventory can be viewed as a sensitive topic at a company like Amgen. But, if done in a scientific manner, and moving from a Months on Hand (MOH) approach to a scientifically calculated inventory, then moving to a multi-echelon inventory optimization, inventory and risk can be reduced. The following are ways that can be used to reduce inventory and risks. -- Track forecast error to understand variation of demand -- Lead time reduction of raw materials and work in progress -- Risk Pool Drug Product (DP) "nude" vials and decrease lead time from DP to customer -- Re-order point frequency increases -- Reduction of demand variability through: -- -- Better communication of demand forecasts between marketing, global supply chain and site supply chain teams. -- -- Reducing variability of manufacturing planning -- Seek commonality of raw materials to lower safety stock levels -- Multi-Echelon Inventory Optimization By accomplishing these activities, Amgen has a scope to reduce 3PL storage requirements by 20k pallet-year spaces over the same time period. This will lower the expense of 3PL costs, and overall risks, over the same time period by $11 M. Considerable work will have to be accomplished, but the benefits will outweigh the costs.
Book Synopsis Pull-based Supply Chain Allocation for Multi-product in Multi-echelon Distribution System by : Pongchai Athikomrattanakul
Download or read book Pull-based Supply Chain Allocation for Multi-product in Multi-echelon Distribution System written by Pongchai Athikomrattanakul and published by . This book was released on 2002 with total page 384 pages. Available in PDF, EPUB and Kindle. Book excerpt: In today's highly competitive market environment, only companies with a highly efficient supply chain management, which integrates all decisions in various levels of planning and operations, can survive. These decisions must be coordinated and under the same goal, which is to minimize the total systemwide costs of the firm while products are manufactured and distributed to end-customers or retailers. In this study, the focus is on a pull-based supply chain, customer demand driven, multiple products and multiple echelon distribution system consisting of m manufacturing centers, n distribution centers, and p retailers or customers. The objectives of this study can be categorized into two parts. The first objective is to present a general framework of the design and configuration of the supply chain network at strategic and tactical planning levels in a single-product and multi-product multi-echelon supply chain systems. The problems deal with determining the appropriate number, location, and size of each manufacturing facility and distribution center/warehouse that should be used within the logistics network. The second objective of the research is to present a methodology for using a pull-based supply chain system both for a single-product system and multi-product system at the operational planning level. The problems deal with determining which products customers will receive from each available manufacturing facility and distribution center, what production quantities of the products should be manufactured by a particular manufacturing facility, and what quantities of each product and ways of shipment should be used from manufacturing facilities to distribution centers and to customers. Based on the nature of these large-scale mixed integer programming problems, decomposition heuristic algorithms based on relationships between primal and dual decompositions are developed. The mathematical models and heuristic algorithms are then demonstrated and evaluated on several sets of randomly generated problems. Although the heuristic algorithms do not guarantee optimum solutions, their results of the test problems suggest that the heuristics are effective in solving fairly large problems with reasonable computational time. Furthermore, they produce superior performances as compared to the other techniques that are tested.
Book Synopsis The Design of Multi-Product Multi-Echelon Inventory Systems Using a Branch-and-Bound Algorithm by : Charles Edward Pinkus
Download or read book The Design of Multi-Product Multi-Echelon Inventory Systems Using a Branch-and-Bound Algorithm written by Charles Edward Pinkus and published by . This book was released on 1971 with total page 151 pages. Available in PDF, EPUB and Kindle. Book excerpt: Large-scale distribution systems require a hierarchy of retail stores and warehouses to satisfy the demand of their customers. Given the maximum number of installations and their possible locations, the problem is to determine which installations to include in the design of the system and which products to stock at these installations. Demand for the products is assumed known and may be deterministic or stochastic. The objective is to find a solution to this design problem which minimizes the total (expected) discounted cost for the lifetime of the system. This problem has been formulated as a combinatorial optimization problem and solved by a branch-and-bound algorithm. The subproblems of the algorithm are tractable integer linear programs. Applications of this model to the design of other multi-use, multi-facility systems are briefly described. (Author).
Book Synopsis Grouping Techniques to Manage Large-scale Multi-item Multi-echelon Inventory Systems by : Anvar Abaydulla
Download or read book Grouping Techniques to Manage Large-scale Multi-item Multi-echelon Inventory Systems written by Anvar Abaydulla and published by . This book was released on 2016 with total page 422 pages. Available in PDF, EPUB and Kindle. Book excerpt: Large retail companies operate large-scale systems which may consist of thousands of stores. These retail stores and their suppliers, such as warehouses and manufacturers, form a large-scale multi-item multi-echelon inventory supply network. Operations of this kind of inventory system require a large number of human resources, computing capacity, etc. In this research, three kinds of grouping techniques are investigated to make the large-scale inventory system "easier" to manage. The first grouping technique is a network based ABC classification method. A new classification criterion is developed so that the inventory network characteristics are included in the classification process, and this criterion is shown to be better than the traditional annual dollar usage criterion. The second grouping technique is "NIT" classification, which takes into consideration the supply structure of the inventory item types. In order to have similar operations-related attributes for items within the same group, a network based K-Means clustering methodology is developed to cluster items based on distance measures. It is believed that there is no single best model or approach to solve the problems of the complex multi-item multi-echelon inventory systems of interest. Therefore, some combinations of different grouping techniques are suggested to handle these problems. The performance of the grouping techniques are evaluated based on effectiveness (grouping penalty cost and Sum of Squared Error) and efficiency (grouping time). Extensive experiments based on 1,024 different inventory system scenarios are carried out to evaluate the performance of the ABC classification, NIT classification, and the K-Means clustering techniques. Based on these experimental results, the characteristics of the 3 individual grouping techniques are summarized, and their performance compared. Based on the characteristics and performance of these grouping techniques, suggestions are made to select an appropriate grouping method.
Book Synopsis Designing a Multi-Product Multi-Echelon Inventory System by : Donald Gross
Download or read book Designing a Multi-Product Multi-Echelon Inventory System written by Donald Gross and published by . This book was released on 1979 with total page 67 pages. Available in PDF, EPUB and Kindle. Book excerpt: Large scale inventory distribution systems typically require a hierarchy of retail stores and warehouses to satisfy the demands of their customers. This paper presents a 0-1 nonlinear programming model for finding the best design of such systems. To use this model, it is necessary to know the optimal inventory policies for multi-echelon system. Therefore, part of this paper is devoted to describing how a dynamic programming approach, first suggested by Andrew Clark, can be used to obtained these policies. The paper presents examples of the use of the nonlinear programming model to find the design of an inventory distribution system. Finally, we present a reformulation of the nonlinear programming model as a 0-1 linear programming model, incorporate capacity constraints at the retail stores and warehouses, and illustrate the use of the new model. (Author).
Book Synopsis Inventory Placement by : Albert Lopez Pagola
Download or read book Inventory Placement written by Albert Lopez Pagola and published by . This book was released on 2012 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: The amount of safety stock to hold at each stage in a supply chain is an important problem for a manufacturing company that faces uncertain demand and needs to provide a high level of service to its customers. The amount of stock held should be small to minimize holding and storage costs while retaining the ability to serve customers on time and satisfy most, if not all, of the demand. This thesis discusses the issue of safety stock placement in a supply chain. This problem is modelled as nonlinear optimization problem. In a first step, the thesis examines possible linearization of this objective function and computes the errors. The work is then extended to the capacitated case. It is organized in five chapters. First of all, there is an introduction explaining the motivations to develop the thesis and to familiarize with inventory placement issue. Second chapter consists in a literature review of research already done and a brief explanation of nomenclature and assumptions. It is important to differentiate between networks without capacity constraints and networks with. Third chapter explains the methods developed by myself. Then, fourth chapter mentions the numerical experiments done, results and a deep analysis. Finally, fifth chapter includes conclusions and achievements obtained with this research.
Book Synopsis Developing New Inventory Segmentation Methods for Large-scale Multi-echelon Inventory Systems by : Alireza Sheikh Zadeh
Download or read book Developing New Inventory Segmentation Methods for Large-scale Multi-echelon Inventory Systems written by Alireza Sheikh Zadeh and published by . This book was released on 2017 with total page 374 pages. Available in PDF, EPUB and Kindle. Book excerpt: A unified objective of this dissertation is to increase the efficiency of large-scale inventory policy algorithms (i.e. including thousands of spare parts) by developing segmentation and aggregation methods while controlling the performance penalty associated with the aggregation. This dissertation is designed based on three articles. In the first and second articles, we present a near-optimal heuristic segmentation approach in the context of the VARI-METRIC and multi-echelon (r,q) problems, which are performance-based nonlinear stocking policy models. The performance-based classification method is developed based on the stocking policies, in contrast to conventional methods that rely on segmentation based on item operational parameters such as demand, annual dollar usage, or item unit cost. This research proposes the artificial stocking policy (ASP) as new inventory classification criteria. Moreover, a non-subjective linear programming scoring method is developed for ranking the criticality of the items. We also proposed performance-based partitioning techniques such as Pareto threshold cutoff-points (PTC), equal partitioning (EP), and simulated annealing (SA), which are tested successfully versus the alternative classification, clustering, and complete enumeration techniques. For instance, the performance difference between using the ASP and SA versus the optimal lower bound is about 1.2%. Finally, in the third article, we design an aggregation and disaggregation framework for solving large-scale, multi-echelon inventory policy problems in a more efficient way. The aggregation process assigns a similar group policy (aggregated solution) for all items belonging to the same group, and the disaggregation process calibrates the group policy into the individual policies using marginal analysis greedy adjustment (MAGA). This adjustment is exceptionally fast in practice and indicates improvement in the performance versus an aggregated solution. The numerical results show that MAGA can approach the original optimal solution in a range between 1-3% penalty cost while reducing the execution time in a range between 90-99.5%.
Book Synopsis Multi-Echelon Inventory Optimization and Demand-Side Management: Models and Algorithms by : Lin He
Download or read book Multi-Echelon Inventory Optimization and Demand-Side Management: Models and Algorithms written by Lin He and published by . This book was released on 2014 with total page 127 pages. Available in PDF, EPUB and Kindle. Book excerpt: Next we study another basic inventory network structure, a distribution system. We study continuous-review, multi-echelon distribution systems subject to supply disruptions, with Poisson customer demands under a first-come, first-served allocation policy. We develop a recursive optimization heuristic, which applies a bottom-up approach that sequentially approximates the base-stock levels of all the locations. Our numerical study shows that it performs very well.
Book Synopsis Multi-echelon Inventory Optimization for an Oil Services Company by : Michael Chalapong
Download or read book Multi-echelon Inventory Optimization for an Oil Services Company written by Michael Chalapong and published by . This book was released on 2011 with total page 56 pages. Available in PDF, EPUB and Kindle. Book excerpt: In the oilfield services industry, healthy margins and the criticality of product availability have often over shadowed the need for operational efficiency. Although those factors have not changed, the emergence of stronger industry competition and challenging economic climates have prompted ABC company to explore efficiency gains via supply chain optimization. This thesis examines and assesses opportunities for ABC Company to employ statistical inventory models, understand a variety of factors that influence inventory levels and costs, and improve its network structure. As many inventory models are not designed to accommodate SKUs that have very low rates of consumption, we also propose a methodology that will provide operational guidance and cost implications to address these types of SKUs.
