Approximation algorithms for capacitated stochastic inventory systems with setup costs

We develop the first approximation algorithm with worst‐case performance guarantee for capacitated stochastic periodic‐review inventory systems with setup costs. The structure of the optimal control policy for such systems is extremely complicated, and indeed, only some partial characterization is available. Thus, finding provably near‐optimal control policies has been an open challenge. In this article, we construct computationally efficient approximate optimal policies for these systems whose demands can be nonstationary and/or correlated over time, and show that these policies have a worst‐case performance guarantee of 4. We demonstrate through extensive numerical studies that the policies empirically perform well, and they are significantly better than the theoretical worst‐case guarantees. We also extend the analyses and results to the case with batch ordering constraints, where the order size has to be an integer multiple of a base load. © 2014 Wiley Periodicals, Inc. Naval Research Logistics 61: 304–319, 2014     

Analysis of a new vehicle scheduling and location problem

We consider a container terminal discharging containers from a ship and locating them in the terminal yard. Each container has a number of potential locations in the yard where it can be stored. Containers are moved from the ship to the yard using a fleet of vehicles, each of which can carry one container at a time. The problem is to assign each container to a yard location and dispatch vehicles to the containers so as to minimize the time it takes to download all the containers from the ship. We show that the problem is NP‐hard and develop a heuristic algorithm based on formulating the problem as an assignment problem. The effectiveness of the heuristic is analyzed from both worst‐case and computational points of view. © 2001 John Wiley & Sons, Inc. Naval Research Logistics 48: 363–385, 2001     

The value of information sharing in a two‐stage supply chain with production capacity constraints

We consider a simple two‐stage supply chain with a single retailer facing i.i.d. demand and a single manufacturer with finite production capacity. We analyze the value of information sharing between the retailer and the manufacturer over a finite time horizon. In our model, the manufacturer receives demand information from the retailer even during time periods in which the retailer does not order. To analyze the impact of information sharing, we consider the following three strategies: (1) the retailer does not share demand information with the manufacturer; (2) the retailer does share demand information with the manufacturer and the manufacturer uses the optimal policy to schedule production; (3) the retailer shares demand information with the manufacturer and the manufacturer uses a greedy policy to schedule production. These strategies allow us to study the impact of information sharing on the manufacturer as a function of the production capacity, and the frequency and timing in which demand information is shared. © 2003 Wiley Periodicals, Inc. Naval Research Logistics, 2003     

The impact of exponential smoothing forecasts on the bullwhip effect

An important phenomenon often observed in supply chain management, known as the bullwhip effect, implies that demand variability increases as one moves up the supply chain, i.e., as one moves away from customer demand. In this paper we quantify this effect for simple, two‐stage, supply chains consisting of a single retailer and a single manufacturer. We demonstrate that the use of an exponential smoothing forecast by the retailer can cause the bullwhip effect and contrast these results with the increase in variability due to the use of a moving average forecast. We consider two types of demand processes, a correlated demand process and a demand process with a linear trend. We then discuss several important managerial insights that can be drawn from this research. © 2000 John Wiley & Sons, Inc. Naval Research Logistics 47: 269–286, 2000     

Maintenance and flight scheduling of low observable aircraft

In this article, we focus on relatively new maintenance and operational scheduling challenges that are faced by the United States Air Force concerning low‐observable (LO) or stealth aircraft. The LO capabilities of an aircraft degrade stochastically as it flies, making it difficult to make maintenance scheduling decisions. Maintainers can address these damages, but must decide, which aircraft should be put into maintenance, and for how long. Using data obtained from an active duty Air Force F‐22 wing and interviews with Air Force maintainers and program specialists, we model this problem as a generalization of the well‐known restless multiarmed bandit superprocess. Specifically, we use an extension of the traditional model to allow for actions that require varying lengths of time, and generate two separate index policies from a single model; one for maintenance actions and one for the flying action. These index policies allow maintenance schedulers to intuitively, quickly, and effectively rank a fleet of aircraft based on each aircraft's LO status and decide, which aircraft should enter into LO maintenance and for how long, and which aircraft should be used to satisfy daily sortie requirements. Finally, we present extensive data‐driven, detailed simulation results, where we compare the performance of the index policies against policies currently used by the Air Force, as well as some other possible more naive heuristics. The results indicate that the index policies significantly outperform existing policies in terms of fully mission capable (FMC) rates. In particular, the experiments highlight the importance of coordinated maintenance and flying decisions. © 2015 Wiley Periodicals, Inc. 62:60–80, 2015     

The impact of manufacturer rebates on supply chain profits

Manufacturer rebates are commonly used as price discount tools for attracting end customers. In this study, we consider a two‐stage supply chain with a manufacturer and a retailer, where a single seasonal product faces uncertain and price‐sensitive demand. We characterize the impact of a manufacturer rebate on the expected profits of both the manufacturer and the retailer. We show that unless all of the customers claim the rebate, the rebate always benefits the manufacturer. Our results thus imply that “mail‐in rebates,” where some customers end up not claiming the rebate, particularly when the size of the rebate is relatively small, always benefit the manufacturer. On the other hand, an “instant rebate,” such as the one offered in the automotive industry where every customer redeems the rebate on the spot when he/she purchases a car, does not necessarily benefit the manufacturer. © 2007 Wiley Periodicals, Inc. Naval Research Logistics, 2007     

On the asymptotic optimality of algorithms for the flow shop problem with release dates

We consider the nonpermutation flow shop problem with release dates, with the objective of minimizing the sum of the weighted completion times on the final machine. Since the problem is NP‐hard, we focus on the analysis of the performance of several approximation algorithms, all of which are related to the classical Weighted Shortest Processing Time Among Available Jobs heuristic. In particular, we perform a probabilistic analysis and prove that two online heuristics and one offline heuristic are asymptotically optimal. © 2005 Wiley Periodicals, Inc. Naval Research Logistics, 2005.