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An Integrated Multi-Product Inventory Model for a Two-Echelon Supply Chain under Cap-and-Trade Mechanism (배출권거래제 하에서 2단계 공급사슬에서 다품목의 통합재고모형)

  • Kim, Dae-Hong
    • Journal of Korean Society of Industrial and Systems Engineering
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    • v.42 no.4
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    • pp.61-68
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    • 2019
  • Currently many companies are interested in reduction of the carbon emissions associated with their supply chain activities such as transportation and operations. Operational decisions, such as modifications in order quantities could an effective way in reducing carbon emissions in the supply chain. Cap-and-trade regulation, sometimes called emissions trading, is a market-based tool to limit greenhouse gas emissions. Under cap-and-trade regulation, emission credits are allocated to the firms and the firms trades emissions under cap-and-trade schemes. In this paper, we propose a single-manufacturer single-buyer two-echelon supply chain problem under the cap-and-trade mechanism incorporating the carbon emissions caused by transportation and warehousing activities where a single manufacturer produces a family of items in order to deliver a family of items to a single buyer at a fixed interval of time for effective implementation of Just-In-Time (JIT) Purchasing. An integrated multi-product lot-splitting model of facilitating multiple shipments in small lots between buyer and manufacturer is developed in a JIT Purchasing environment. Also, an iterative heuristic algorithm is developed to derive the common order interval, the number of intervals for each product and the number of shipments between the buyer and the manufacturer during the common interval. A numerical example is given to illustrate the savings in reduction of total cost and carbon emissions by the inventory model incorporating cap-and-trade mechanism compared to the classical inventory model. The proposed inventory model could be useful for the practical solution of two-echelon supply chain inventory problem under cap-and-trade mechanism.

Optimal Design of Process-Inventory Network Considering Exchange Rates and Taxes in Multinational Corporations (다국적 기업에서 환율과 세금을 고려한 공정-저장조 망구조의 최적설계)

  • Yi, Gyeong-Beom;Suh, Kuen-Hack
    • Journal of Institute of Control, Robotics and Systems
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    • v.17 no.9
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    • pp.932-940
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    • 2011
  • This paper presents an integrated analysis of supply chain and financing decisions of multi-national corporation. We construct a model in which multiple currency storage units are installed to manage the currency flows associated with multi-national supply chain activities such as raw material procurement, process operation, inventory control, transportation and finished product sales. Core contribution of this study is to quantitatively investigate the influence of macroscopic economic factors such as exchange rates and taxes on operational decisions. The supply chain is modeled by the Process-Storage Network with recycle streams. The objective function of the optimization is minimizing the opportunity costs of annualized capital investments and currency/material inventories minus the benefit to stockholders interpreted by home currency. The major constraints of the optimization are that the material and currency storage units must not be depleted. A production and inventory analysis formulation, the periodic square wave (PSW) model, provides useful expressions for the upper/lower bounds and average levels of the currency and material inventory holdups. The expressions for the Kuhn-Tucker conditions of the optimization problem are reduced to a subproblem and analytical lot sizing equations. The procurement, production, transportation and financial transaction lot sizes can be determined by analytical expressions after the average flow rates are already known. We show that, when corporate income tax is taken into consideration, the optimal production lot and storage sizes are smaller than is the case when such factors are not considered typically by 20 %.

A Study on the Implementation of Distributed MRP to Increase the Utilization of the MES System in the Automobile Parts Manufacturing Industry (자동차부품 제조업의 MES 시스템 활용도를 높이기 위한 분산형 MRP 구현에 관한 연구)

  • Nam, Eun-Jae;Kim, Kwang-Soo
    • Journal of the Korea Safety Management & Science
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    • v.24 no.2
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    • pp.127-134
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    • 2022
  • Production management in the automobile parts industry is carried out according to the production plan of the customer, so it is important to prevent shortages in product supply. As the product composition became increasingly complex, the MES System was built for the purpose of efficient production plan management and inventory management, but its utilization is low. This study analyzed the problems of the MES system and sought to improve it. Through previous studies, it was confirmed that the inventory management of the pull approach that actually occurred in the warehouse is more suitable than the push approach based on the forecast of the warehouse for the volatility, complexity, and uncertainty of orders in the auto parts industry. To realize this, we tried distributed MRP by using the ADO function of VBA to link the standard information of the MES system with Excel and change the structure of the BOM table. Through this, it can help increase the accuracy of production planning and realize efficient inventory management, thereby increasing the utilization of the MES system in the auto parts industry and enhancing the competitiveness of the company.

Optimizing Concurrent Spare Parts Inventory Levels for Warships Under Dynamic Conditions

  • Moon, Seongmin;Lee, Jinho
    • Industrial Engineering and Management Systems
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    • v.16 no.1
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    • pp.52-63
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    • 2017
  • The inventory level of concurrent spare parts (CSP) has a significant impact on the availability of a weapon system. A failure rate function might be of particular importance in deciding the CSP inventory level. We developed a CSP optimization model which provides a compromise between purchase costs and shortage costs on the basis of the Weibull and the exponential failure rate functions, assuming that a failure occurs according to the (non-) homogeneous Poisson process. Computational experiments using the data obtained from the Korean Navy identified that, throughout the initial provisioning period, the optimization model using the exponential failure rate tended to overestimate the optimal CSP level, leading to higher purchase costs than the one using the Weibull failure rate. A Pareto optimality was conducted to find an optimal combination of these two failure rate functions as input parameters to the model, and this provides a practical solution for logistics managers.

A Vehicle Routing Model for Multi-Supply Centers Based on Lp-Distance (일반거리산정방법을 이용한 다-물류센터의 최적 수송경로 계획 모델)

  • Hwang, Heung-Suk
    • IE interfaces
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    • v.11 no.1
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    • pp.85-95
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    • 1998
  • This study is focussed on an optimal vehicle routing model for multi-supply centers in two-echelon logistic system. The aim of this study is to deliver goods for demand sites with optimal decision. This study investigated an integrated model using step-by-step approach based on relationship that exists between the inventory allocation and vehicle routing with restricted amount of inventory and transportations such as the capability of supply centers, vehicle capacity and transportation parameters. Three sub-models are developed: 1) sector-clustering model, 2) a vehicle-routing model based on clustering and a heuristic algorithm, and 3) a vehicle route scheduling model using TSP-solver based on genetic and branch-and-bound algorithm. Also, we have developed computer programs for each sub-models and user interface with visualization for major inputs and outputs. The application and superior performance of the proposed model are demonstrated by several sample runs for the inventory-allocation and vehicle routing problems.

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Integrated Inventory-Distribution Planning in a (1 : N) Supply Chain System with Heterogeneous Vehicles Incorporated

  • Kim, Eun-Seok;Lee, Ik-Sun
    • Management Science and Financial Engineering
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    • v.17 no.2
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    • pp.1-21
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    • 2011
  • This paper considers an integrated inventory-distribution system with a fleet of heterogeneous vehicles employed where a single warehouse distributes a single type of products to many spatially distributed retailers to satisfy their dynamic demands. The problem is to determine order planning at the warehouse, and also vehicle schedules and delivery quantities for the retailers with the objective of minimizing the sum of ordering cost at the warehouse, inventory holding cost at both the warehouse and retailers, and transportation cost. For the problem, we give a Mixed Integer Programming formulation and develop a Lagrangean heuristic procedure for computing lower and upper bounds on the optimal solution value. The Lagrangean dual problem of finding the best Lagrangrean lower bound is solved by subgradient optimization. Computational experiments on randomly generated test problems showed that the suggested algorithm gives relatively good solutions in a reasonable amount of computation time.

A Study on Inventory Control Policy for Quantity-Discount and Budget Constraint (수량 할인과 예산 제약을 고려한 재고관리 정책에 관한 연구)

  • Lee, Dongju
    • Journal of Korean Society of Industrial and Systems Engineering
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    • v.38 no.2
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    • pp.145-151
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    • 2015
  • As order quantity is increased, the ordering cost per item will be cheaper due to saving of transportation and material handling costs. In this paper, two realistic assumptions such as quantity discount and budget limit are considered. Quantity discount means that all units in the order will be discounted according to the predetermined order levels. Budget limit represents that the costs for inventory investments are bounded. This paper develops a Lagrangian relaxation approach for a continuous review inventory model with a budget constraint and quantity discounts. Computational results indicate that the proposed approach provides a good solution. Sensitivity analysis is done to get some insights on budget limit and quantity discount. As budget limit or the amount of discount according to order quantity is increased, order quantity is increased, whereas reorder point is not always increased.

A Comparison Study on Retailer-managed and Vendor-managed Inventory Policies in the Retail Supply Chain (소매점 공급사슬에서 소매점주도와 공급자주도 재고정책에 대한 비교 연구)

  • Hong, Sung-Chul;Park, Yang-Byung
    • Journal of Korean Institute of Industrial Engineers
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    • v.32 no.4
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    • pp.382-392
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    • 2006
  • Vendor-managed inventory policy(VMIP) is a supply-chain initiative where the supplier is authorized to manage inventories of items at retail locations. In VMIP, the supplier monitors sales and stock information at retail locations and makes decisions of inventory replenishment and transportation simultaneously. VMIP has been known as an effective supply chain strategy that can realize many of benefits obtainable only in a fully integrated supply chain. However, VMIP does not always lead to lower the supply chain cost. It sometimes generates the total supply chain cost higher than the traditional retailer-managed inventory policy (RMIP). In this paper, we perform a comparison study on RMIP and VMIP in the retail supply chain which consists of a single supplier and a number of retailers. We formulate mixed integer programming models for both RMIP and VMIP with vehicle routing problems and perform computational experiments on various test problems. Furthermore, we derive the conditions which guarantee the dominant position for VMIP with respect to total supply chain cost in the simple retail supply chain.

SUCCESS FACTORS FOR JIT MANAGEMENT OF PRIMARY COMMODITY SUPPLY CHAINS IN AUSTRALIA

  • Kim Tae Ho;Wegener Malcolm
    • Journal of the Korea Safety Management & Science
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    • v.6 no.3
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    • pp.141-152
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    • 2004
  • Supply chains for agricultural commodities with their various constraints such as production lead time, seasonal production, and methods of storage are limited in the extent to which techniques like Just-in-Time (JIT) inventory management can be applied. It is beyond the ability of producers to control harvest time and many agricultural products are perishable so that they can incur exceptional losses in storage if they are not handled correctly. This is a source of additional costs and inefficiency in supply chain management. The purpose of this study is to reduce or eliminate such sources of loss and inefficiency and to identify success factors for the JIT inventory management system where it can be applied for agricultural products. Where JIT techniques can be applied in supply chain management for agricultural products, costs such as transportation, inventory, and storage losses can be reduced with concurrent increases in efficiency. In the paper, some of the problems associated with applying JIT inventory control methods in supply chain management for agricultural commodities will be reported through a series of case studies.

A Regression-Based Approach for Central Warehouse Location Problem (중앙창고 입지선정을 위한 회귀분석기반 해법)

  • Yoo, Jae-Wook;Lee, Dong-Ju
    • Journal of Korean Society of Industrial and Systems Engineering
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    • v.32 no.2
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    • pp.57-65
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    • 2009
  • In continuous review inventory model, (ϱ, γ) system, order quantity(ϱ) and reorder point(γ) should be determined to calculate inventory-related cost that consists of setup, holding, and penalty costs. The procedure to obtain the exact value of ϱ and γ is complex. In this paper, a regression analysis is proposed to get the approximate inventory-related cost without the determination of ϱ and γ in the case that the standard deviation(σ) of the lead time demand is small or that the mean(μ) of the lead time demand is proportional to σ. To save inventory-related cost, central warehouses with (ϱ, γ) system can be built. Central warehouse can provide some stores with products with the consideration of the tradeoff between inventory-related cost and transportation cost. The number and the location of central warehouses to cover all the stores are determined by a regression-based approach. The performance of the proposed approach is tested by using some computational experiments.