Production Capacity Constraints Research Articles

To Deliver or Not to Deliver: The Case For and Against Restaurant Delivery

Since the start of the COVID-19 pandemic, online food delivery has experienced significant growth. As consumer preferences continue to shift toward this new platform, it is crucial for restaurants to assess the benefits and risks associated with engaging in the delivery market. By synthesizing academic research and industry reports, this case highlights the associated benefits for restaurants including the extension of service capacity constraints, market growth, and ease of implementation. Additionally, risks are introduced including food quality control, profitability, production capacity constraints, and cannibalization. The topics are discussed and contrasted under the examples of a large service provider (Shake Shack) and smaller independent restaurant (EL Ideas). The case provides valuable insights regarding the opportunities and challenges of partnering with food delivery providers, enabling future restaurant managers to make informed decisions in this evolving market.

Evaluation of Drinking Water Service Achievement in Tanah Bumbu Regency, South Kalimantan

The issues with drinking water services in Tanah Bumbu Regency include the fact that service levels have not yet reached 100% adequacy and 15% safety as outlined in the RPJMN 2024, and the level of water loss remains high. The research aims to evaluate the achievement of drinking water services in Tanah Bumbu Regency, South Kalimantan Province. The study was conducted in Tanah Bumbu Regency, South Kalimantan Province. Sampling for community respondents utilized purposive sampling methods. Sampling for PTAM respondents employed purposive sampling methods, with 11 employees selected from the organizational structure of the office (head of general affairs and personnel; head of technical affairs; and head of each IKK unit). The evaluation results regarding the management of drinking water services in Tanah Bumbu Regency in terms of the 4K aspects (Quality, Quantity, Continuity, and Affordability) indicate that the quality aspect is still suboptimal due to limited funding for health department inspections, resulting in limited water sample collection at household connections. Regarding Quantity, the provision of drinking water services is prioritized in urban areas, while in rural areas, the operator (PTAM Tanah Bumbu) has not been able to meet the needs of the entire population of Tanah Bumbu Regency, both urban and rural, due to production capacity constraints. Keywords: Evaluation, Drinking water, Tanah Bumbu

Function adjustment of economic law under industrial new normal environment based on improved neural network

In the new normal period, the trend changes and adjustments of the environment such as international trade, production capacity, labor supply and resource constraints have put forward new requirements for China’s industrial development, which have brought new challenges and given new opportunities. In the new normal stage where economic growth continues to decline, industrial growth is still an important support for economic growth. The advancement of industrial technology is the main driving force for improving the total factor productivity of the industrial industry. Therefore, the most important thing to promote industrial growth is to upgrade the level of industrial technology. In response to the above-mentioned problems, this paper analyzed the relationship between industrial technology and industrial output in the new normal environment by using the BP neural network (BPNN) algorithm. The connection between the two has been found, which provided a clear direction for the functional adjustment of economic law. Experimental studies have shown that there is a positive relationship between industrial technological progress and industrial output. When other conditions are the same, and when the non-new normal is selected, industrial output increases by about 0.36% for every 1% increase in industrial technological progress. When choosing to be in the new normal, industrial technological progress has a higher impact on industrial output. For every 1% increase in technological progress, industrial output increases by about 0.39%.

A decomposition approach for robust omnichannel retail operations considering the third-party platform channel

In recent years, third-party platforms (3PPs), such as Amazon, have attracted considerable interest from omnichannel retailers as a sales channel option. Even though omnichannel retailers have their own offline and online channels, they have participated in the fulfillment service of 3PPs to absorb additional demand from the 3PP channel. To the best of our knowledge, no existing study has addressed the robust omnichannel retail operations utilizing the channel of 3PPs as one of a retailer’s sales channels. To fill these research gaps, this paper formulates omnichannel retail operations with the 3PP channel into a multi-period stochastic optimization model. The proposed model involves the supply chain networks of the retailer and 3PP and also the production capacity constraint, which restricts replenishment quantity depending on the production capacity of each supplier. Unfortunately, the existence of the 3PP channel and the production capacity constraint increases the computational complexity; thus, the problem cannot be solved within an acceptable computational time by using the existing approach (i.e., a two-phase approach (TPA) based on robust optimization). To overcome these challenges, we propose a novel decomposition approach called DECOM. DECOM has a distinct advantage in that it can decompose the proposed problem into two small problems, one for the retailer’s supply chain and the supply chain of the 3PP. We evaluate the performance of DECOM by comparing it with the TPA on a set of experiments carried out in various experimental settings. Both DECOM and TPA could provide high-quality solutions, but DECOM outperformed TPA in terms of computational efficiency. In particular, we observed that DECOM was scalable to large-scale instances. Furthermore, we explored the advantages of utilizing omnichannel retail operations and the 3PP channel by performing a sensitivity analysis. In particular, we showed the cost-saving effect resulting from the introduction of the 3PP channel in omnichannel retailing.

Capacity sharing between competing manufacturers: A collective good or a detrimental effect?

Capacity sharing has become a prevalent solution for addressing the supply-demand mismatch by optimizing capacity allocation among participating manufacturers. However, effective coordination and cooperation are required among involved parties, particularly if capacity sharing occurs between competing manufacturers. This paper investigates capacity sharing between competing manufacturers and examines the optimal sharing service fee policy, taking external market, internal operational, and relationship-specific factors into consideration. Our study incorporates product substitution rate, information symmetry (or asymmetry), and interfirm power relationship to go beyond the immediate direct cost-benefit analysis of capacity sharing and evaluates the trade-off between capacity sharing associated benefits and costs. Our analysis results illustrate how the market and relationship-specific factors interact with operational factors such as production cost difference and capacity constraints to influence firms' capacity sharing decisions. The broad set of decision outcomes derived from our comprehensive analyses is beneficial for companies of all sizes and shapes to make informed strategic and operational decisions according to their own circumstances.

A heuristic method for production scheduling of an open pit mining operation

ABSTRACT A mathematical model for production scheduling of open pit mines maximises the net present value and satisfies the reserves, pit slope angle, and production capacity constraints. A solution to this model aims to deliver an extraction sequence and the movement of materials across various stages within the operation over a defined planning horizon. However, given that the mineral reserves delineated into thousands of mining blocks form the geological input, the model falls in the category of large-scale optimisation problems, i.e. it is computationally intractable, and exact methods cannot solve realistic scenarios of the problem. Therefore, this paper contributes an alternative to the conventional mathematical model along with a corresponding heuristic method to solve this proposed model. An implementation of the proposed method at various realistic instances reveals better performance in terms of net present value, computation time and optimality gap as compared to the traditional methods.

Adaptive production control of two-product closed-loop supply chain dynamics under disruptions

ABSTRACT This paper addresses the dynamics of a two-product closed-loop supply chain with realistic assumptions on production capacity constraints. The closed-loop supply chain is also subject to unpredictable disruptions, which lead to the non-stationarity of customer demand. The factory employs a production control policy to decide the product type to be processed. We propose a novel production control policy, named the Adaptive Hedging Corridor Policy, which makes decisions on production capacity based on the demand evolution. The proposed strategy is compared with well-known production control policies widely used in literature, such as DDMRP. Simulation results demonstrate the benefits of implementing an adaptive production control as it enables the closed-loop supply chain to enhance customer service level and bullwhip effect. Additionally, a sensitivity analysis is provided to assess the influence of experimental factors on the performance. The analysis highlights the significance of return flows and manufacturing operations for the closed-loop supply chain.

A remanufacturing supply chain network with differentiated new and remanufactured products considering consumer preference, production capacity constraint and government regulation.

Remanufacturing is a sustainable product reutilization strategy to realize responsible consumption and production. However, remanufacturing practice can be subject to deficient consumer perception, production capacity constraint, uncertain demand and government intervention. This paper considers outsourced remanufacturing mode to establish and investigate a remanufacturing supply chain (RSC) network consisting of multiple manufacturers, retailers and remanufacturers. Optimality conditions with RSC network members are derived utilizing variation inequality. Numerical examples based on data accumulated from a remanufacturing enterprise and questionnaire survey on consumer perception for remanufactured products, are presented to put the proposed model into practice. Influences of product heterogeneity (new and remanufactured products), consumer preference, production capacity constraint, product price competitiveness, market demand fluctuation, and government financial measures on RSC network production and pricing strategies are investigated through numerical analyses. Analytical results indicate that pricing for the remanufactured product would be equivalent to that of the new product when consumers value the remanufactured product at a relatively high level, however an excessive penchant for the remanufactured product is less profitable especially from the perspective of the remanufacturer. In general, an upper-middle level of consumer preference for the remanufactured product is the most favourable scenario. When remanufacturing industry is just emerging, a high tax will be imposed on the manufacturer to accumulate remanufacturing subsidy for the government to achieve its balanced budget. As the remanufacturing industry develops and consumer environmental awareness enhances, it is especially essential for the government to establish a levy-subsidy mechanism to maintain sustainable progress of the industry. Combining main conclusions with the background of Chinese remanufacturing industry, managerial implications are provided from respective perspectives of enterprises' remanufacturing operation, government financial regulation, and consumer awareness enhancement. The analyses and results are especially relevant as a reference for remanufacturing decision-makings as well as government financial regulations, thus enhancing production sustainability as well as environmental benefits.

Downstream firm's equity financing for capacity expansion in a supply chain

AbstractIn this research, we investigate a supply chain consisting of a downstream firm who purchases a component from an upstream firm and then transforms it into a final product. The downstream firm has a production capacity constraint and considers to raise capital from an investor through equity financing. The raised capital not only enables the downstream firm to expand the capacity but also allows the investor to hold equity shares in the downstream firm. We derive the optimal pricing and production decisions of the two firms and discuss the optimal equity financing strategy of the downstream firm. We consider two distinct models: the external equity financing model, where the capital is raised from an outside institution, and the internal equity financing model, where the capital is raised from the upstream firm. We show that because the cooperative relationship between the two firms can be improved in the internal equity financing model, the production quantity in this model may be even higher than that in a benchmark model with no capacity constraint and no equity holding by the investor in the downstream firm. In addition, the original shareholder of the downstream firm gets more benefit from the internal equity financing activity than from the external equity financing activity. We also analyze the impacts of the key model parameters on the equity financing strategy and find that the dependence of the financing strategy on the initial asset of the downstream firm is quite different in the two models. Moreover, when the production cost of the downstream firm is changed, less capital raised for expanding capacity may create more value for the original shareholder of the downstream firm in each model. Finally, we show that the key finding remains unchanged when deterministic demand is changed to stochastic demand.

Order Acceptance and Scheduling Model Based on Improved Genetic Algorithm

As the manufacturing industry’s industrial structure continues to evolve, many enterprises have shifted from traditional make-to-store modes (MTS) to make-to-order modes (MTO). This paper focuses on MTO manufacturing enterprises’ order acceptance and scheduling problem, namely, how to exclude low-margin orders under capacity constraints and schedule them. We establish a hypothetical model with the goal of maximizing corporate profits, taking into account production capacity constraints and delivery time constraints. To solve the model, we propose a heuristic solution method based on genetic algorithms. The feasibility of the method is verified through randomly generated examples. The research results demonstrate that our proposed solution method can quickly solve large-scale order decision-making problems and has practical significance as a guiding tool.

Optimisation of Working Line Length during the Period of Gently Inclined Slope in Tilted Coal Seam Open-Pit Mine

In the initial production phase of an inclined seam opencast mine, due to initial investment and production capacity constraints, zoning or phasing is usually used, resulting in changes in the length of the working line during the transition of the mining area. To simplify the process, this article analyses the changes in the length of the working line during the period of slow gang steering in inclined seam opencast mines. In order to simplify the process, this article analyses the changes in the length of the working line in each period. The relationship between the length of the working line and the realm stripping ratio in the overlapping area of the two mining areas is discussed, and the variation in the realm stripping ratio and the economically reasonable stripping ratio under different working line lengths is illustrated. The advantages and disadvantages of the different optimization options are described. The optimization method was applied to the Zhundong opencast coal mine to calculate the working line lengths for the two stages. The optimized stripping ratio for the second-stage south gang location is equal to the economically reasonable stripping ratio of 3.50 m3/t, which reduces coal compression and improves economic efficiency, and is a guideline for the study of the working line lengths in each stage of the open-pit mine slow gang turning.

Recycling Performance of the Tire Remanufacturing with Production Capacity Constraints considering Carbon Tax and Technology Subsidy

After considering the manufacturer’s production capacity constraints and market preference, this paper presents a closed-loop supply chain of automotive tires which consists of a remanufacturer, a retailer, and a recycler, where used tires are collected and reused. Based on the features of the closed-loop tire remanufacturing supply chain, four Stackelberg models are developed to investigate the influences of the carbon tax and the technology subsidy on recycling performance. The result shows that the carbon tax is conducive to improving the remanufacturing technology level and reducing emissions, but it reduces the profit of the manufacturer and the retailer. A subsidy can make up for their loss by the carbon tax. Moreover, an allied decision of the chain’s members can help them gain economic benefits, while an independent decision can improve environmental benefits.

Breaking Cournot: The Effects of Capacity-Adjusting Technology

The technological improvements modeled for Cournot competition have primarily focused on production cost reductions and scope effects. We consider a case where the technology improves the ability to affect the production capacity constraints instead. We find that although such technological progress entails public benefits in the form of greater consumer surplus and social welfare, it is likely to have limited and even sometimes harmful private effects (e.g., to firm profits). We formally model this technological improvement possibility through the relevant variants of oligopolies and rival technological asymmetries. We describe and discuss the strategic implications for managers and policy-makers considering investing and exploiting such capacity-adjusting technologies. We also flesh out the many core areas for future work to follow up on in our initial unique results.

Comments: What’s Holding Back Production Increases?

The big oil producers are balancing the chasing of more production with delivering dividends to shareholders. So far, the scale is tipping in favor of shareholders. While recent quarterly reports have made this clear, it was reemphasized at a US House Energy and Commerce Committee hearing in April when executives from Chevron, BP America, Devon Energy, ExxonMobil, Pioneer Natural Resources, and Shell USA addressed alleged “price gouging” at the gas pump and rejected pressure to shift their record profits from paying dividends and stock buybacks to ramp up production and lower prices. The executives’ statements ranged from “We can increase production and return value to our shareholders” (Chevron CEO Michael Wirth) to Devon Energy CEO Richard Muncrief and Pioneer Natural Resources CEO Scott Sheffield stating “the answer is no” when asked if they would reduce buybacks and dividends. Gretchen Watkins, Shell USA president, said her company intends to make investor returns and increase production and investments in renewable energy. Several of the executives pointed to their industry’s record losses during the pandemic when demand tanked (global fuel consumption fell by more than 25%) and West Texas Intermediate fell off a cliff to –$40/bbl on 20 April 2020 and slowly crept up. Even if the oil price drops, retail gas prices won’t immediately follow to stem the allegations of price gouging. Garrett Golding, a senior business economist at the Federal Reserve Bank of Dallas, wrote, “In the energy economics world, this phenomenon is known as ‘rockets and feathers,’ where it is commonly observed that prices at the pump shoot up with oil prices like a rocket, but fall like a feather back to the ground after oil prices drop. There are two reasons for this scenario repeating itself during oil-price spikes: the macro-level logistics of how oil and refined products churn through the physical market and the micro-level economic decisions of service station owners and their customers.” Today, demand is strong even at average oil prices of about $103/bbl over the past 6 weeks. Now, the summer driving season is around the corner and consumers are eager to hit the road and fly the skies, finally free(r) of pandemic restrictions and concerns. Yet, the Permian rig count has remained fairly flat over the same period. Despite high oil prices (WTI just below $114/bbl on 17 May), drillers aren’t ramping up activity. Many interrelated factors affect supply and demand. Simplifying the complexity of the global market shines, at best, a narrow beam on some of the factors affecting production. The supply side is dealing with volatility of oil prices; the uncertainty of Europe’s energy supplies, including Europe’s potential embargo on Russian oil; the varied focus on energy transition; sustained fiscal restraint by smaller operators as they continue to reduce or avoid debt; the shortage of sand needed for fracturing in the North American shale plays; labor shortages; the reactivation of idled equipment; and supply chain disruptions. A supply bottleneck is affecting oil country tubular goods (OCTG), which have seen volatility related to the “weak domestic demand in China due to COVID-19 lockdowns and Chinese currency depreciation,” wrote Rystad senior analyst Marina Bozkurt in a recent market note. Business activity has been affected by shutdowns and logistics problems. “OCTG prices may remain pretty high this year, driven by higher costs of raw materials due to geopolitical tensions globally and government regulations to reduce carbon emissions.” Prices continue to increase at Japanese OCTG mills, where the focus is primarily on value-added products such as 13Cr material. Propping up prices are “tight global availability and strong demand. Despite a possible price fluctuation for raw materials, prices will unlikely cool down significantly as long as the Russia-Ukraine situation continues.” In an April report, the Federal Reserve Bank of Dallas said the growing gap between OPEC+ production quotas and actual oil production is being driven by production capacity constraints in several OPEC+ countries, largely attributable to Angola, Nigeria, and Saudi Arabia. Their capacity is limited by “infrastructure issues and the difficulty of attracting sufficient investment to offset production declines at existing wells.” The shortfall was nearly 1.1 million B/D in February, the most recent month for which there were official production data available. In May, JP Morgan lowered its outlook for 2022 global oil demand by 1 million B/D, citing higher oil prices, a weakening growth outlook, and escalating geopolitical tensions. How this plays out will affect producers’ appetite to increase or decrease their production or reconsider their priorities.

Investment choices and production dynamics: The role of price expectations, financial deficit, and production constraints

We propose a model that helps answer two questions: (1) what motivates firms to invest in novel technologies, often characterized by low (or negative) returns, forgoing high-profitability projects, and (2) why responses to price changes of seemingly similar firms may differ substantially. The developed framework reveals how financial limitations, production capacity constraints, and expectations on intertemporal price differences and productivity improvements alter investment decisions and the elasticity of supply. Using the U.S. unconventional oil and gas investment and production data, we reveal the trade-off between profit generation and investment-driven improvements in productivity. Then, with simulations, we show how the price elasticity of supply may differ across firms with different financial and production capabilities and how learning abilities and price expectations explain the negative elasticity (or “backward-bending” supply curve) phenomenon.

Modelling and optimization of material flows in the wood pellet supply chain

To reduce the use of fossil fuels, forest-based biomass appears as an engaging source of energy. Nevertheless, logistics costs represent one of the main barriers in the use of forestry residues and wood waste for bioenergy and biofuels production. The relatively low energy density of biomass contributes to a higher transportation cost per unit of energy content compared with fossil fuels. Other issues, such as raw material availability, seasonality, production and storage capacity constraints, and transportation distances for product distribution also are critical in the management of biomass supply chain. The interconnectedness of these factors directly impacts into the movement of materials along the logistics chain. In this way, this paper researches the alternative of using forest residues and wood waste as raw material sources for wood pellet production through the modelling and optimization of all logistics activities performed in the supply chain. The objective is the minimization of the total operative cost, which in turn allows determining the minimum profitable selling price of produced pellets. Besides production and inventory decisions, the proposal determines the more profitable routes for biomass collection and pellets distribution. A standard decomposition technique, consisting in designing routes first and later computing products and raw material flows, is employed to solve the optimization problem. The proposal is tested on a large-size case study designed with real data from the forest industry in the Argentinean Mesopotamia. Due to the close interaction between all logistics decisions in the supply chain, several scenarios are assessed to estimate the impact on the solutions of some changes in the problem configuration.

Green strategies to reduce the environmental impact of jam production

Food operations management is the most impactful driver of global environmental challenges, including global warming, climate change, water pollution and loss of biodiversity. According to recent studies, food production systems efficiency and food loss are leading causes of environmental degradation. Although many methodologies to assess the environmental impact of food production have already been investigated, there is an urgent need to provide environmental evaluations in the fruit sector focusing on the most widespread industrial production processes and their corresponding impact. In this context, the operations management in jam production represents one of the most critical issues. Generally, in the most common jam production systems, energy-intensive treatments, including chemical substances, are adopted to extend the shelf-life of the raw materials or finished products, allowing to increase the process performance in terms of production levelling, inventory management, and market policies. In many cases, this approach compromises the sustainability of treatments, reducing the corresponding environmental performance. This paper aims to analyze the most common processes for jam production, comparing their environmental performances and the effects of the related centralized/decentralized strategies to be adopted. The potential impact categories of each process phase have been assessed. Results led to identifying the jam production from fresh fruit by adopting a decentralized production strategy, the best option considering the environmental performance under production capacity constraints

Integrated lot-sizing and pricing problem under cross-price demand model

This paper addresses a multi-product integrated lot-sizing and pricing problem for an entity which produces and sells different products under a finite production capacity constraint. The demands for each product is assumed to be linear and takes into account the complementarity or substitution characteristics of the products. The objective is to find prices and the production planning (productions quantities, inventory level, setups configuration) for each product during several time periods to maximize the profit. The problem is formulated as a mixed integer nonlinear model with the consideration of different constraints related to production capacity and setup costs. Some new theoretical properties regarding the convexity of the problem and its relaxation are established. Finally, numerical examples are presented to illustrate the obtained results.

A blended model of restaurant deliveries, dine-in demand and capacity constraints

The fast-growing food-delivery services are expected to continue to expand following Covid19. While considered a favorable strategic initiative, delivery might not be profitable for all restaurants. Accordingly, this study provides an analytical model to assess the impact of adding delivery service to a traditional dine-in restaurant. The theoretical contribution is a mathematical model depicting the strategic allocation of the restaurant’s production capacity, revealing a surprisingly complex balance between production (capacity constraints) , marketing (customer utility) , cannibalism and markets interdependency, leading to a range of business outcomes. A large-scale empirical investigation uses over a million unique transactions to test some of the model’s insights. The results show the introduction of delivery may increase transactions and revenue. However, the theoretical model suggests capacity constraints can limit growth potential over time. Correlations between dine-in and delivery demand reveal weekday patterns between both channels as an important indicator for how delivery may impact restaurant operations. • The multifaceted strategic change of adding delivery is surprisingly complex. • While considered a favorable strategic initiative, delivery may not necessarily be profitable. • A framework that operationalized the balance between production and marketing is proposed. • The analytical framework also modeled cannibalism and markets interdependency. • Empirical analyses further demonstrated the complex nature of adding delivery.

Integrated production-inventory-routing problem for multi-perishable products under uncertainty by meta-heuristic algorithms

ABSTRACT The present study aims to introduce an integrated production-inventory-routing problem (PIRP) with a mixed-integer linear programming model, remarking a multi-perishable product, multi-period, and heterogeneous fleets with time windows in a distribution network. The objective of the proposed model is to maximise the total profit, which equals the selling revenue subtract the aggregation of the holding, production, transportation, and utility preference costs. At the production level, a multi-period production system with production capacity constraints is considered, in which the inventory at each stage of production is intended to compute the related holding costs and schedule more appropriate planning. The vehicle routing problem is tackled at the distribution level regarding vehicles with various capacities in a multi-period condition. Consequently, a fuzzy chance-constrained programming model is used to deal with fuzzy parameters. Furthermore, two evolutionary algorithms, namely a hybrid imperialist competitive algorithm (HICA) and self-adaptive differential evolution (SADE), are proposed to solve the given problem. Subsequently, several numerical examples with managerial insights are solved to evaluate the performances of the proposed algorithms and show their effectiveness and efficiency. Computational results demonstrate the superiority of the proposed algorithms for this problem. Finally, the applicability of the proposed algorithms is investigated by a real-case study.