Production/distribution system design with inventory considerations

This study addresses the design of a three‐stage production/distribution system where the first stage includes the set of established retailers and the second and third stages include the sets of potential distribution centers (DCs) and potential capacitated suppliers, respectively. In this problem, in addition to the fixed location/operating costs associated with locating DCs and suppliers, we consider the coordinated inventory replenishment decisions at the located DCs and retailers along with the appropriate inventory costs explicitly. In particular, we account for the replenishment and holding costs at the retailers and selected DCs, and the fixed plus distance‐based transportation costs between the selected plants and their assigned DCs, and between the selected DCs and their respective retailers, explicitly. The resulting formulation is a challenging mixed‐integer nonlinear programming model for which we propose efficient heuristic solution approaches. Our computational results demonstrate the performance of the heuristic approaches as well as the value of integrated decision‐making by verifying that significant cost savings are realizable when the inventory decisions and costs are incorporated in the production distribution system design. © 2012 Wiley Periodicals, Inc. Naval Research Logistics 59: 172–195, 2012     

Oligopolistic contracting: Channel coordination under competition

We study contracts between a single retailer and multiple suppliers of two substitutable products, where suppliers have fixed capacities and present the retailer cost contracts for their supplies. After observing the contracts, the retailer decides how much capacity to purchase from each supplier, to maximize profits from the purchased capacity from the suppliers plus his possessed inventory (endowment). This is modeled as a noncooperative, nonzero‐sum game, where suppliers, or principals, move simultaneously as leaders and the retailer, the common agent, is the sole follower. We are interested in the form of the contracts in equilibrium, their effect on the total supply chain profit, and how the profit is split between the suppliers and the retailer. Under mild assumptions, we characterize the set of all equilibrium contracts and discuss all‐unit and marginal‐unit quantity discounts as special cases. We also show that the supply chain is coordinated in equilibrium with a unique profit split between the retailer and the suppliers. Each supplier's profit is equal to the marginal contribution of her capacity to supply chain profits in equilibrium. The retailer's profit is equal to the total revenue collected from the market minus the payments to the suppliers and the associated sales costs.     

地方物流供应商“偷懒”行为监管机制研究

军民融合现代军事物流体系中,地方物流供应商往往会"偷懒",这必将损害军民融合现代军事物流体系的整体绩效。首先描述了"偷懒"行为及其危害性,从机制入手,基于博弈论建立地方物流供应商"偷懒"行为监管机制;分析并证明了监管机制的有效性。这一机制的构建对于监管地方物流供应商具有重要作用。     

Effects of Nuclear Technology Export Competition on Nuclear Nonproliferation

ABSTRACT

While nuclear suppliers compete in markets, they simultaneously partner in other fields. This produces a delicate relationship between civilian nuclear programs and nuclear weapon proliferation. This study explores how export competition affects suppliers’ conditions of supply related to nuclear nonproliferation. We investigated three export cases (India, North Korea, and South Korea) and identified four effects that competition has on the conditions of supply related to nonproliferation. First, under highly competitive conditions, suppliers might hesitate to enforce the conditions of supply to avoid negotiation conflicts with recipients. Second, suppliers focus on politically and economically attractive recipients while mostly ignoring unattractive ones, perhaps allowing proliferation problems to fester out of view in marginal states. Third, suppliers can build consensus on the conditions of supply to avoid being the only party experiencing negotiation conflicts. Fourth, suppliers can constrain others from relaxing the conditions of supply to maintain economic benefits and nonproliferation norms. The first two effects accelerate proliferation while the last two promote nonproliferation. Although the extent of these effects can vary with changes in nonproliferation norms, they can contribute to our understanding of the relationship between nonproliferation and civilian nuclear programs.     

基于Agent的装备采购供应商仿真模型研究

装备采购合同管理是一项复杂系统工程,目前常用的管理科学和系统工程的方法难以对其进行建模仿真并量化分析。基于Agent的仿真技术是研究复杂系统的一种有效、重要的方法。针对装备采办合同管理中的供应商选择问题,运用多Agent仿真技术建立模型并进行仿真。通过对仿真结果的分析,提出了有效选择供应商的合理建议。     

Inventory models of future supply uncertainty with single and multiple suppliers

We consider order-quantity/reorder-point inventory models where the availability of supply is subject to random fluctuations. We use concepts from renewal reward processes to develop average cost objective function models for single, two, and multiple suppliers. Identifying the regenerative cycle for each problem aids the development of the cost function. In the case of two suppliers, spectral theory is used to derive explicit expressions for the transient probabilities of a four-state continuous-time Markov chain representing the status of the system. These probabilities are used to compute the exact form of the average cost expression. For the multiple-supplier problem, assuming that all the suppliers have similar availability characteristics, we develop a simple model and show that as the number of suppliers becomes large, the model reduces to the classical EOQ model. © 1996 John Wiley & Sons, Inc.     

地方物流供应商“藏捏”信息行为的监管机制

针对军民融合现代军事物流体系内物流实体存有"藏捏"信息行为,难以实现信息真正共享,妨害军队物资采购的问题,从地方物流供应商"藏捏"信息动机分析入手,考虑到安全保密原则,基于交纳保密保证金的做法对格罗夫斯机制进行修改,建立地方物流供应商"藏捏"信息行为的监管机制,并运用算例证明了该机制的科学有效性。     

An EOQ model with multiple suppliers and random capacity

We consider an EOQ model with multiple suppliers that have random capacities, which leads to uncertain yield in orders. A given order is fully received from a supplier if the order quantity is less than the supplier's capacity; otherwise, the quantity received is equal to the available capacity. The optimal order quantities for the suppliers can be obtained as the unique solution of an implicit set of equations in which the expected unsatisfied order is the same for each supplier. Further characterizations and properties are obtained for the uniform and exponential capacity cases with discussions on the issues related to diversification among suppliers. © 2005 Wiley Periodicals, Inc. Naval Research Logistics, 2006     

Allocation of quality improvement targets based on investments in learning

Purchased materials often account for more than 50% of a manufacturer's product nonconformance cost. A common strategy for reducing such costs is to allocate periodic quality improvement targets to suppliers of such materials. Improvement target allocations are often accomplished via ad hoc methods such as prescribing a fixed, across‐the‐board percentage improvement for all suppliers, which, however, may not be the most effective or efficient approach for allocating improvement targets. We propose a formal modeling and optimization approach for assessing quality improvement targets for suppliers, based on process variance reduction. In our models, a manufacturer has multiple product performance measures that are linear functions of a common set of design variables (factors), each of which is an output from an independent supplier's process. We assume that a manufacturer's quality improvement is a result of reductions in supplier process variances, obtained through learning and experience, which require appropriate investments by both the manufacturer and suppliers. Three learning investment (cost) models for achieving a given learning rate are used to determine the allocations that minimize expected costs for both the supplier and manufacturer and to assess the sensitivity of investment in learning on the allocation of quality improvement targets. Solutions for determining optimal learning rates, and concomitant quality improvement targets are derived for each learning investment function. We also account for the risk that a supplier may not achieve a targeted learning rate for quality improvements. An extensive computational study is conducted to investigate the differences between optimal variance allocations and a fixed percentage allocation. These differences are examined with respect to (i) variance improvement targets and (ii) total expected cost. For certain types of learning investment models, the results suggest that orders of magnitude differences in variance allocations and expected total costs occur between optimal allocations and those arrived at via the commonly used rule of fixed percentage allocations. However, for learning investments characterized by a quadratic function, there is surprisingly close agreement with an “across‐the‐board” allocation of 20% quality improvement targets. © John Wiley & Sons, Inc. Naval Research Logistics 48: 684–709, 2001     

Time-minimizing transportation problems

A method is given for finding those solutions of a transportation problem which minimize the total time necessary for transporting goods from the suppliers to the consumers. Several extensions of the model are presented.     

ACQUIRING FOREIGN NUCLEAR ASSISTANCE IN THE MIDDLE EAST

The United Arab Emirates (UAE) has laid out an ambitious plan to become the first Arab country to possess a civilian nuclear energy program. Central to that effort has been the Emirati government's ability to obtain foreign nuclear assistance. This article traces the UAE's strategies for overcoming the obstacles that stood in the way of nuclear suppliers providing assistance. It examines the approach taken by the UAE to assuage the safety and security concerns of nuclear suppliers, how the UAE leveraged its alliances with France and the United States to obtain their cooperation, and its strategies for engaging domestic interest groups in supplier states. The generalizable elements of the UAE's strategies are discussed and used to provide insight into the prospects for other Middle Eastern states' bids to obtain similar assistance. The article concludes with a discussion of the potentially transformative aspects of the strategies employed by the UAE in shaping other countries' pursuit of nuclear energy in the region.     

The defence firm of the future

This paper offers the personal view of a senior executive in the Defence Procurement Agency about the future requirements of the defence industry’s principal UK customer. The focus here is on trying to identify the type of corporate behaviour and range of skill sets that the UK Government will need from defence suppliers, both primes and supply chain companies in the future. The concluding message from this ‘Customer View’ is that there is likely to be a continuing market for the company that specializes in delivering defence capability. It will be a company that will be looking for a long‐term relationship, with a specialist knowledge of its various national customers and a willingness to work openly and closely with them. It will be agile in its ability to bring together diverse technologies, to package them as a system and to deliver them either as hardware or as a service. Such suppliers will also need to innovate and to adapt at least as rapidly as the threats that they seek to counter.     

Supplier certification and quality investment in supply chains

Global sourcing has made quality management a more challenging task, and supplier certification has emerged as a solution to overcome suppliers' informational advantage about their product quality. This article analyzes the impact of certification standards on the supplier's investment in quality, when a buyer outsources the production process. Based on our results, deterministic certification may lead to under‐investment in quality improvement technology for efficient suppliers, thereby leading to potential supply chain inefficiency. The introduction of noisy certification may alleviate this under‐investment problem, when the cost of information asymmetry is high. While allowing noisy certification always empowers the buyer to offer a menu to screen among heterogeneous suppliers, the buyer may optimally choose only a limited number of certification standards. Our analysis provides a clear‐cut prediction of the types of certifiers the buyer should use for heterogeneous suppliers, and we identify the conditions under which the supplier benefits from noisy certification. © 2013 Wiley Periodicals, Inc. Naval Research Logistics, 2013     

A three‐stage procurement optimization problem under uncertainty

This article examines a problem faced by a firm procuring a material input or good from a set of suppliers. The cost to procure the material from any given supplier is concave in the amount ordered from the supplier, up to a supplier‐specific capacity limit. This NP‐hard problem is further complicated by the observation that capacities are often uncertain in practice, due for instance to production shortages at the suppliers, or competition from other firms. We accommodate this uncertainty in a worst‐case (robust) fashion by modeling an adversarial entity (which we call the “follower”) with a limited procurement budget. The follower reduces supplier capacity to maximize the minimum cost required for our firm to procure its required goods. To guard against uncertainty, the firm can “protect” any supplier at a cost (e.g., by signing a contract with the supplier that guarantees supply availability, or investing in machine upgrades that guarantee the supplier's ability to produce goods at a desired level), ensuring that the anticipated capacity of that supplier will indeed be available. The problem we consider is thus a three‐stage game in which the firm first chooses which suppliers' capacities to protect, the follower acts next to reduce capacity from unprotected suppliers, and the firm then satisfies its demand using the remaining capacity. We formulate a three‐stage mixed‐integer program that is well‐suited to decomposition techniques and develop an effective cutting‐plane algorithm for its solution. The corresponding algorithmic approach solves a sequence of scaled and relaxed problem instances, which enables solving problems having much larger data values when compared to standard techniques. © 2013 Wiley Periodicals, Inc. Naval Research Logistics, 2013     

Coordinated replenishments from multiple suppliers with price discounts

In this study we present an integer programming model for determining an optimal inbound consolidation strategy for a purchasing manager who receives items from several suppliers. The model considers multiple suppliers with limited capacity, transportation economies, and quantity discounts. We propose an integrated branch and bound procedure for solving the model. This procedure, applied to a Lagrangean dual at every node of the search tree, combines the subgradient method with a primal heuristic that interact to change the Lagrangean multipliers and tighten the upper and lower bounds. An enhancement to the branch and bound procedure is developed using surrogate constraints, which is found to be beneficial for solving large problems. We report computational results for a variety of problems, with as many as 70,200 variables and 3665 constraints. Computational testing indicates that our procedure is significantly faster than the general purpose integer programming code OSL. A regression analysis is performed to determine the most significant parameters of our model. © 1998 John Wiley & Sons, Inc. Naval Research Logistics 45: 579–598, 1998     

A Bayesian analysis on the effect of multiple supply options in a quick response environment

In the apparel industry, vendors often suffer from high mismatches in supply and demand. To cope with this problem, they procure the same style product from different suppliers with different manufacturing costs. Especially in the quick response environment, which allows vendors to monitor trends in customer demand and search for available suppliers through the electronic market, they have additional opportunities to improve their decision‐making. In this paper, we propose an analytical profit maximization model and develop efficient decision tools to help both the middle and lower level managers pursuing this strategy. Furthermore, we have shown how significantly the vendors' potential competitive edge can be improved by exploiting multiple supply options, even at the expense of high premium procurement costs for late orders. The effect is critical, especially in a highly competitive market, and it has important implications for the top managers. © 2003 Wiley Periodicals, Inc. Naval Research Logistics, 2003     

Mandated defence offsets: can they ever deliver?

Defence offsets are elements of defence procurement deals additional to the primary content. Offsets are usually expected to yield technological or industrial benefits to the purchasing country (e.g. countertrade, technology transfers, or additional jobs) and military buyers often require suppliers to make offsets available “cost-free.” The authors argued previously that such strategies achieve little of value to buyers that lack market power and are unnecessary otherwise, since purchasers with the market power to extract more value for money from foreign suppliers can do so anyway. This article also focuses on the supply side of offset deals. The USA is the world's largest defence offsets supplier but the US government opposes offsets demands as economically inefficient and trade distorting. Even if offsets are inefficient and trade distorting, they may still benefit a materiel-exporting country such as the USA as they may induce exports and create associated benefits for the offsets provider.     

Sole sourcing versus dual sourcing under stochastic demands and lead times

The use of a single vendor for each inventoried item is usually assumed in most of the inventory models. However, there are situations where the use of more than one vendor should be considered, especially when lead times are stochastic. This research presents a theoretical investigation of the effect of cost structures on the relative performance of sole-sourcing versus dual-sourcing inventory control policies. We show that except for cases where the ordering cost is high, the lead-time variability is low, or the customer service level is low, dual sourcing performs better than sole sourcing under the normally distributed demand and shifted-exponential lead times. Moreover, the computational results indicate the dual sourcing provides a better service level than sole sourcing at the optimal solutions, and that dual sourcing results in larger order quantities than sole sourcing, which suggests that attractive quantity discounts may not be in jeopardy when dual sourcing is employed. Finally, because it is generally known that multiple sourcing can enhance the competition among suppliers, material managers should consider splitting purchase orders when two equally qualified suppliers are available. © 1994 John Wiley & Sons, Inc.     

Defence Procurement Policy: The Way Ahead

Abstract

The Defence Procurement Executive is the single largest customer of British industry and controls some 127 000 contracts. As Chief of Defence Procurement, Dr McIntosh explains the effects of expanding market forces on defence contracts and the suppliers, before continuing to outline the prospects for future competitive contracts in view of the recent cuts in defence budgets.     

Supply management in assembly systems

We consider the case when n components are needed to assemble a given product. Components are provided by suppliers, and the period between the order time and the time a component is available (i.e., the lead time) is a random variable with a known distribution. The due date for the assembled product is also known. The costs to be taken into account are the inventory costs of the components and the backlogging cost of the assembled product. We propose an iterative algorithm which leads to the optimal order instants of the components. © 1993 John Wiley & Sons, Inc.