Random Demand Research Articles

Enhancing ‘disease x’ responsiveness: a risk-averse distributionally robust optimization approach for resource allocation under infectious disease transmission variability

Testing stands out as a crucial element in the public health response during a pandemic, serving diverse purposes pivotal for controlling the spread of the infectious agent. It enables early case detection, facilitating prompt isolation and treatment, thereby reducing the severity of individual cases and interrupting the transmission chain within communities. Recognizing the pivotal role of testing in managing and mitigating the impact of a pandemic, this paper addresses the distribution of test kits, taking into account the spatiotemporal uncertainty in demand and the ambiguity of the demand's probability distribution over a multi-period horizon. Determining decisions about location, allocation, operational distribution, and shipment is the main goal in order to guarantee equity and fairness in the distribution of resources among different populations. A two-stage distributionally robust optimisation (DRO) model is proposed to address the ambiguity in the probability distribution of demand. An equivalent reformulation is derived for this model over L 1 -norm and joint L 1 - and L ∞ -norm ambiguity sets. Additionally, a risk-averse criterion is employed to more accurately account for some of the worst realizations of random future demand scenarios. To demonstrate the proposed DRO model's practicality, a numerical analysis of COVID-19 test kit distribution in the US is carried out.

Corrective Lateral Transshipment Application in a Centralized Inventory System With Random Demand

Our research work aims to study the lateral transshipment problem as a mode of cooperation between different retailers who are located at the same level. In the first work, we apply a simulation-optimization approach based on a metamodel to search for the different measures of the initial level of replenishment. Then, by applying a series of simulation experiments by the ARENA software to select the best lateral transshipment policy. This aims to maximize the expected average global gain and minimize the average global Disservice rate. For this, several Transshipment policies will be tested, for example; non-pooling, full pooling and partial pooling policies depending on the selection of physical inventory thresholds.

Supply chain strategic behavior and coordination with a risk-averse manufacturer under random yield and demand

Supply chain strategic behavior and coordination with a risk-averse manufacturer under random yield and demand

MDD-based reliability analysis of multi-state system with common bus performance sharing

This paper considers a reliability model for multi-state systems (MSS) with common bus performance sharing. The MSS consists of heterogeneous components with different performance and demand levels and a common bus performance redistribution system. Each component may degrade and thus have different performance levels to satisfy its own random demand. If one component has performance that exceeds its demand, the redundant performance can be redistributed through the common bus with limited capacity to components with performance deficiency. The entire system fails if there are components with deficit performance after the performance sharing. A new analytical method based on multi-valued decision diagrams (MDD) is suggested to evaluate the reliability of the considered MSS. The MDD method encompasses an efficient model generation algorithm with top-down truncation operation rules based on components’ surplus and deficit performance. Furthermore, case studies and benchmark research are presented to demonstrate the applicability and efficiency of the proposed approach, as compared to the existing method.

A multi-valued decision diagrams-based method for reliability analysis of performance-sharing k-out-of-n: G system considering component degradation

This paper models the reliability of a performance-sharing k-out-of-n: G system with heterogeneous degrading components and a performance-redistributing common bus. Each component may behave at various performance levels to meet its random demand. If one component exhibits performance beyond its demand, the redundant performance is redistributed to components with deficit performance via the common bus with limited capacity. The system fails if the number of operating components is less than k after sharing the redundant performance. A new analytical method based on multi-valued decision diagrams (MDDs) is put forward, which comprises an efficient model generation algorithm leveraging top-down simplification rules and a new ordering heuristic for improving MDD generation efficiency. The MDD evaluation engages the continuous-time Markov Chains to compute the steady-state probabilities of system components considering the degradation effects. Case studies of a wind power generation system and a data processing system as well as benchmark studies are conducted to illustrate the applicability and efficiency of the proposed method. A comparative study with the universal generating function-based method is also provided to further demonstrate the efficiency of the proposed MDD-based method.

Robust day-ahead scheduling of cooperative energy communities considering multiple aggregators

Future cities must play a vital role in reducing energy consumption and decarbonizing the electricity sector, thus evolving from passive structures towards more efficient smart cities. This transition can be facilitated by energy communities. This emerging paradigm consists of collectivizing a set of residential installations equipped with onsite renewable generators and storage assets (i.e., prosumers), which can eventually share resources to pursue collective welfare. This paper focuses on cooperative communities, where prosumers share resources without seeking selfish monetary counterparts. Despite their apparent advantages, energy management and scheduling of energy communities suppose a challenge for conventional tools due to the high level of uncertainty (especially due to intermittent renewable generation and random demand), and privacy concerns among prosumers. This paper addresses these issues. Specifically, a novel management structure based on multiple aggregators is proposed. This paradigm preserves users' confidential features while allowing them to extract the full potential of their assets. To efficiently manage the variety of assets available under uncertainty, an adaptive robust day-ahead scheduling model is developed, which casts as a solvable and portable Mixed Integer Linear Programming framework, which eases its implementation in real-world cases. The new proposal concerns uncertain generation and demand using a polyhedral representation of the uncertainty set. A case study is conducted to validate the developed model, showing promising results. Moreover, different results are obtained and analysed. Finally, it is worth remarking on how the level of robustness impacts the collective bill, incrementing it by 75 % when risk-averse conditions are assumed. In addition, the role of storage assets under pessimistic conditions is remarked, pointing out that these assets rule the scheduling plan of the community instead of renewable generators.

Unequal area facility layout problem considering transporters interaction– a queuing theory and machine learning approach

ABSTRACT This study presents a novel analytical framework that merges queueing theory with deep neural networks to optimize facility layout and transporter selection in manufacturing systems. It addresses critical factors such as stochastic service times of facilities, random demand, transporter capacity, speed, and transportation batch size. Three objectives are considered: minimizing material handling costs (MHC), work-in-process (WIP), and the interaction probability of transporters (IP). The latter objective focuses on reducing instances where transporters cross paths to prevent accidents or disruptions. WIP is computed using a multi-class open queueing network model, while IP is determined using a deep neural network. The model facilitates the identification of facilities and the assignment of suitable transporters, considering empty transporter travels to minimize MHC and WIP. Results from the model are compared to a simulation model for validation across various scenarios, demonstrating acceptable accuracy. Additionally, a multi-objective meta-heuristic optimization algorithm is employed to solve the model. The effectiveness of the optimization method is evaluated against other approaches, highlighting its applicability in enhancing manufacturing system performance.

Coordination of a socially responsible two-stage supply chain under random yield and demand

This study integrates corporate social responsibility (CSR) and channel coordination in a supply chain (SC) under random yield and random demand. In the SC, a supplier with random yield determines wholesale price and production input, and a producer with CSR decides order quantity and CSR investment facing CSR-related random demand. For centralized SCs with and without CSR, we prove the unimodality of the expected profits of the SCs for generic random yield and demand, and show the uniqueness of optimal ratio of order quantity to production input quantity. We disclose that the optimal expected profit of the SC with CSR is larger than that of the SC without CSR, and the profit difference increases with CSR effort and expected yield. We also find that the optimal CSR investment increases with the expected yield. Subsequently, the Nash equilibrium solutions of decentralized SCs under wholesale price and revenue-sharing contracts are analyzed. Next, we present a revenue and CSR sharing contract to realize channel coordination and win-win of SC members and related stakeholders. Lastly, we verify theoretical statements of centralized and decentralized SCs versus three numerical examples, and present managerial insights for the effect of yield uncertainty and CSR effort.

A choice-based approach to dynamic capacitated multi-item lot sizing with demand uncertainty

With the purpose of planning and implementing pricing decisions on a tactical level as well as production decisions on an operational level, we consider – in an integrated form – the capacitated multi-item lot sizing problem with uncertain item demands and price-dependent discrete choice demand. The model is embedded into an overarching rolling horizon procedure allowing for adaptations to changes in demand and cost parameters. We first formulate the static problem version as a nonlinear mathematical program with underlying multinomial logit demand and subsequently linearize it to make it viable for mathematical programming solvers. Uncertainty of demands is taken into account by Monte Carlo simulation. More specifically, we generate random demand scenarios and utilize them as input data for the sample average approximation problem version. We further endow the problem setting with possibilities to incorporate pricing policy requirements such as restricting the number of price adaptations or defining periods without price adaptations. Overall, the developed approach yields a powerful tool for balancing item demands via pricing in a way favorable for adhering to available production capacities and thereby striking a balance between revenues and costs. Computational results confirm that adapting prices to time-dependent demand and cost parameters is exploited effectively to maintain a deliberately controlled production environment. Moreover, the integrated pricing and production setting allows to study the effect of pricing policy restrictions and demand uncertainties upon attainable profits.

Breaking Ground: A New Area Record for Low-Latency First-Order Masked SHA-3

SHA-3, the latest hash standard from NIST, is utilized by numerous cryptographic algorithms to handle sensitive information. Consequently, SHA-3 has become a prime target for side-channel attacks, with numerous studies demonstrating successful breaches in unprotected implementations. Masking, a countermeasure capable of providing theoretical security, has been explored in various studies to protect SHA-3. However, masking for hardware implementations may significantly increase area costs and introduce additional delays, substantially impacting the speed and area of higher-level algorithms. In particular, current low-latency first-order masked SHA-3 hardware implementations require more than four times the area of unprotected implementations. To date, the specific structure of SHA-3 has not been thoroughly analyzed for exploitation in the context of masking design, leading to difficulties in minimizing the associated area costs using existing methods. We bridge this gap by conducting detailed leakage path and data dependency analyses on two-share masked SHA-3 implementations. Based on these analyses, we propose a compact and low-latency first-order SHA-3 masked hardware implementation, requiring only three times the area of unprotected implementations and almost no fresh random number demand. We also present a complete theoretical security proof for the proposed implementation in the glitch+register-transition-robust probing model. Additionally, we conduct leakage detection experiments using PROLEAD, TVLA and VerMI to complement the theoretical evidence. Compared to state-of-theart designs, our implementation achieves a 28% reduction in area consumption. Our design can be integrated into first-order implementations of higher-level cryptographic algorithms, contributing to a reduction in overall area costs.

Optimal Dynamic Production Planning for Supply Network with Random External and Internal Demands

This paper focuses on joint production/inventory optimization in single and multiple horizons, respectively, within a complicated supply network (CSN) consisting of firm nodes with coupled demands and firm nodes with coupled demands. We first formulate the single-epoch joint optimal output model by allowing the production of extra quantity for stock underage, considering the fixed costs incurred by having inventory over demand and shortfalls. Then, the multi-temporal dynamic joint production model is further investigated to deal with stochastic demand fluctuations among CSN nodes by constructing a dynamic input–output model. The K-convexity defined in Rn space is proved to obtain the optimal control strategy. According to physical flow links, all demands associated to the nodes of CSN are categorized into the inter-node demand inside CSN (intermediate demand) and external demand outside CSN (final demand). We exploit the meliorated input–output matrix to describe demand relations, building dynamic input–output models where demand fluctuates randomly in single-cycle CSN and finite multi-cycle CSN. The novel monocyclic and multicyclic dynamic models have been developed to minimize system-wide operational costs. Unlike existent literature, we consider fixed costs incurred by overdemand and underdemand inventory into system operational cost functions and then demonstrate the convexity of objective functions. The cost function with two fixed penalty costs due to excess and shortage of inventory is developed in a multicycle model, and the K-convexity defined in Rn is proved to find out the optimal strategy for joint dynamic production of CSNs in the case of multi-products and multicycles.

Optimal Policies and Heuristics to Match Supply with Demand for Online Retailing

Problem definition: We consider an online retailer selling multiple products to different zones over a finite horizon with multiple periods. At the start of the horizon, the retailer orders the products from a single supplier and stores them at multiple warehouses. The retailer determines the products’ order quantities and their storage quantities at each warehouse subject to its capacity constraint. At the end of each period, after random demands in the period are realized, the retailer chooses the retrieval quantities from each warehouse to fulfill the demands of each zone. The objective is to maximize the retailer’s expected profit over the finite horizon. Methodology/results: For the single-zone case, we show that the multiperiod problem is equivalent to a single-period problem and the optimal retrieval decisions follow a greedy policy that retrieves products from the lowest-cost warehouse. We design a nongreedy algorithm to find the optimal storage policy, which preserves a nested property: Among all nonempty warehouses, a smaller-index warehouse contains all the products stored in a larger-index warehouse. We also analytically characterize the optimal ordering policy. The multizone case is unfortunately intractable analytically, and we propose an efficient heuristic to solve it, which involves a nontrivial hybrid of three approximations. This hybrid heuristic outperforms two conventional benchmarks by up to 22.5% and 3.5% in our numerical experiments with various horizon lengths, fulfillment frequencies, warehouse capacities, demand variations, and demand correlations. Managerial implications: A case study based on data from a major fashion online retailer in Asia confirms the superiority of the hybrid heuristic. With delicate optimization, the heuristic improves the average profit by up to 16% compared with a dedicated policy adopted by the retailer. The hybrid heuristic continues to outperform the benchmarks for larger networks with various structures. Funding: X. Li is supported by the Singapore Ministry of Education [Tier 1 Grant 23-0619-P0001]. Y. F. Lim is grateful for the support from the Singapore Management University under the Maritime and Port Authority Research Fellowship and the Singapore Ministry of Education [Tier 1 Grant MSS23B001]. Supplemental Material: The online appendix is available at https://doi.org/10.1287/msom.2021.0394 .

Data‐driven inventory control involving fixed setup costs and discrete censored demand

AbstractWe investigate a data‐driven dynamic inventory control problem involving fixed setup costs and lost sales. Random demand arrivals stem from a demand distribution that is only known to come out of a vast ambiguity set. Lost sales and demand ambiguity would together complicate the problem through censoring, namely, the inability of the firm to observe the lost portion of the demand data. Our main policy idea advocates periodically ordering up to high levels for learning purposes and, in intervening periods, cleverly exploiting the information gained in learning periods. By regret, we mean the price paid for ambiguity in long‐run average performances. When demand has a finite support, we can accomplish a regret bound in the order of which almost matches a known lower bound as long as inventory costs are genuinely convex. Major policy adjustments are warranted for the more complex case involving an unbounded demand support. The resulting regret could range between and depending on the nature of moment‐related bounds that help characterize the degree of ambiguity. These are improvable to when distributions are light‐tailed. Our simulation demonstrates the merits of various policy ideas.

Optimal resource allocation in common bus performance sharing systems with transmission loss

AbstractThe reliability modeling and optimization of performance sharing systems (PSSs) are of vital importance due to their wide applications. Existing research mainly focuses on evaluating and maximizing the reliability of PSSs. However, in many practical systems, decision‐makers tend to prioritize the average cost of the system over its reliability. This paper studies the resource allocation optimization in common bus PSSs. In such systems, each unit has binary‐state random performance to satisfy the multi‐state random demand. The surplus performance can be shared via a common bus with transmission loss between the common bus and the unit. The performance allocation, performance transmission, and unsupplied demand incur costs. Resource allocation strategies are determined by optimization models considering different objective functions and constraints. Additionally, transmission loss between the common bus and the unit is considered. A genetic algorithm is employed to efficiently find the optimal allocation strategies. Numerical examples prove the effectiveness of the proposed models in improving system reliability and reducing system costs.

Optimizing JIT production and maintenance strategies for material management in the presence of quality decline and random demand fluctuations

Optimizing JIT production and maintenance strategies for material management in the presence of quality decline and random demand fluctuations

The distributional implications of health taxes: A case study on the Italian sugar tax

As over-consumption of sugar-sweetened beverages (SSBs) is considered a major contributor to the rising prevalence of obesity and associated diseases, public authorities from different countries are considering the introduction of SSBs taxation. In this study, we evaluate the potential impact of the upcoming Italian sugar tax on SSBs and sugar consumption, also accounting for differences across socio-economic groups. We also analyze alternative SSBs tax designs (i.e., excise tax on sugar and two-tier tax based on sugar content) to compare their effectiveness and provide a more general analysis about the outcomes of SSBs taxation. In our empirical analysis, we first estimate consumers’ demand for SSBs using the random coefficient logit demand model (Berry, Levinsohn, and Pakes, 1995) and Nielsen Household Panel data of SSBs purchases for the period 2019–2020. Then, the estimated demand parameters and marginal costs for SSBs are employed to conduct counterfactual simulations to derive the new market equilibria under the simulated SSBs tax scheme scenarios. Our results show that the Italian sugar tax is the most effective in reducing SSBs and sugar consumption (on average, by 18% and 24% respectively) among all the simulated tax scenarios. This is also due to the strategic reactions of SSBs manufacturers who over-shift the change in marginal cost (i.e., tax rate) to final prices. Moreover, despite being financially regressive, taxes on SSBs may be progressive from a health perspective, as low-income groups experience the greatest fall in SSBs and sugar consumption. Reinvesting tax revenues in health-related programs targeting the most vulnerable socio-economic groups (i.e., low-income households with children) may minimize the regressivity of SSBs taxes.

Pricing strategy based on a stochastic problem with barter exchange under variable promotional effort for a retail channel

Barter exchange platform gains popularity as an effective trade exchange strategy to minimize the vast use of paper money. In retail management, the application of the barter platform is growing because of cashless trade. It allows a retail enterprise to trade unused products in exchange for other assets purchased by reducing the actual purchase of assets. In this context, the study analyzes a stochastic model of a barter exchange problem under a retail channel. It investigates the barter exchange policy in three different models: conventional newsvendor model without barter exchange, with barter exchange, and with barter exchange with promotional effort and emissions level. The market demand for products is considered random and random with deterministic variables for three types of models. Stochastic models are solved in two different ways: with and without probability distribution functions of the random market demand. For maximization of the retailer's profit, the proposed framework obtains optimal decisions on ordered quantity, retail price, promotional effort, and emissions level. Five examples are tested and numerical results show that the barter exchange policy is more profitable than a traditional newsvendor model. A combination of stochastic and deterministic variable demand provides 34.31% more profit than a stochastic demand. Sensitivity analysis, discussions, and managerial insights are provided in detail on optimal decisions.

Three-tier integrated demand-supply energy management for optimized energy usage in institutional building

Sustainable Energy Plan is an indispensable field of study in the context of Building Energy Management (BEM) which yearns for a cutting-edge technique to raise consumers’ level of contentment with energy usage. This paper introduces a three-tier strategic approach for demand cum supply side management at the prosumer end named TID-SEM (Three-tier Integrated Demand cum Supply Energy Management) framework. The framework commences with data collection, machine learning, and Random Forest classifier-based Demand side management to reduce peak demand. Followingly, a feasibility study on available sources (Solar PV + Battery + Diesel Generator + Grid) was done using the HOMER simulator. The quality techno-enviro-economic shows distinguished optimal one under each criterion. Ultimately to overcome, an ideal computative multicriteria decision-making approaches Fuzzy Analytic Hierarchy Process, the Fuzzy Preference Ranking Organization Method for Enrichment Evaluations, and the Fuzzy Technique for Order of Preference by Similarity to Ideal Solution employed to highlight the most optimal configuration. The study focuses on a department building within a higher education institution in the Madurai district, Tamil Nadu, India. On implementing the TID-SEM, ‘PV + Grid’ after DSM configuration was ranked as the most optimum. Lastly, a sensitivity analysis was conducted to evaluate the techno-enviro-economic impact of uncertain parameters on the optimal configuration, ensuring the robustness of the proposed framework.

Cost Optimization in Cloud Computing: Capacity Reservation for Intermittent Random Demand Surges

The adoption of cloud computing has been accelerating over the last decade, while enterprise cloud users (“firms”) are struggling to manage their growing cloud expenditures in the face of intermittent digital demand surges caused by planned or random events. To deal with such challenges, a firm can employ reserved instances with the standard contract length (e.g., one year) to meet the stationary base demand, which we refer to as the base contracts, complemented by additional reserved instances with either standard or shorter contract lengths, which we refer to as the supplementary contracts, to cope with the demand surges. We first analyze a model whereby the surge and inter-surge durations are deterministic, demand magnitude is random, and cancellation of the reservations is allowed. We develop a capacity management plan for the firm including not only the optimal capacity levels, which follow a newsvendor-type solution, but also the optimal policy for managing the purchase, renewal, cancellation, or expiration of the supplementary contracts, which can be characterized as a two-threshold policy. Due to the complexity of the structure of the optimal policy, we also construct an effective heuristic policy by excluding the renewal option from the action space, which can be applied to a more general setting where the surge and inter-surge durations are random. We examine two model extensions: (1) when trades of reserved instances are allowed in a secondary marketplace; (2) when the firm does not have exact information about the distributions of the surge magnitude and duration while it can adjust the capacity levels as data unveils. Our analysis shows that the optimal policy for managing the supplementary contracts depends on the relative magnitude of the surge and inter-surge durations in relationship to the cancellation fee. Moreover, our numerical results show that cloud platforms that offer a secondary marketplace are more attractive to firms from a cost standpoint than those that allow cancellation only. The latter, without the secondary marketplace, however, can achieve parity with the former by offering a deeper discount rate for the reserved instances, thereby bypassing the cost of administering the secondary marketplace.

Managing Hybrid Manufacturing/Remanufacturing Inventory Systems With Random Production Capacities

In this article, we consider hybrid manufacturing/remanufacturing inventory systems that produce a single product to satisfy demands over a finite planning horizon. In each period, the firm receives random demand and returns of end-of-life products. A serviceable product can be manufactured from ample raw materials or remanufactured from a returned product. The two operations possess random dedicated capacities. The firm’s objective is to minimize the expected total discounted cost over the planning horizon. We partially characterize the firm’s optimal inventory policy when the two capacities are positively dependent and completely characterize it when only one capacity is random. When there is ample manufacturing capacity, we connect the model with an auxiliary dual-sourcing inventory model and derive a more detailed structure of the optimal policy. Finally, our numerical study provides actionable insights into the effects of random capacities. Among others, we find that approximating a slightly/moderately variable remanufacturing capacity as its deterministic mean capacity or ignoring the correlation between two random capacities under a multi-period setting incurs a limited cost to the firm.