Reduction Of Inventory Levels Research Articles

Relax-and-Fix Heuristics Applied to a Real-World Lot Sizing and Scheduling Problem in the Personal Care Consumer Goods Industry

This paper addresses an integrated lot sizing and scheduling problem in the industry of consumer goods for personal care, a very competitive market in which good customer service and cost management are crucial in the competition for clients. In this research, a complex operational environment composed of unrelated parallel machines with limited production capacity and sequence-dependent setup times and costs is studied. There is also a limitation in the total storage capacity for finished goods, a characteristic not found in the literature. Backordering is allowed, but it is extremely undesirable. The problem is described through a mixed integer linear programming formulation. Since the problem is NP-hard, relax-and-fix heuristics with hybrid partitioning strategies are investigated. Computational experiments with randomly generated and real-world instances are presented. The results show the efficacy and efficiency of the proposed approaches. Compared to the current solutions used by the company, the best proposed strategies yield results with substantially lower costs, primarily from the reduction in inventory levels and better allocation of production batches on the machines.

On the suitability of insourced Additive Manufacturing for spare parts management

Additive Manufacturing (AM) has recently emerged as a promising technique in spare parts manufacturing. Unlike conventional manufacturing (CM) techniques, AM can lead to a reduction in inventory levels, particularly when insourced, through manufacturing spare parts on demand. However, due to the high production costs, the economic benefits of manufacturing spare parts through AM are unclear to managers and practitioners. Recent studies aimed at assisting in this decision have two main limitations: (i) they assume that AM spare parts typically have higher failure rates than CM parts: and (ii) they do not consider the AM machinery investment costs and parts are assumed to be externally supplied. We have developed a model that overcomes these limitations, first by assessing the failure rates of AM spare parts through an interdisciplinary approach rather than making arbitrary assumptions, which enables a comparison with the failure rates through CM reported in the literature. Second, we considered that the manufacturing of AM spare parts can be insourced and thus the investment costs for AM printers are also included, while the manufacturing of CM spare parts is considered to be outsourced. The model was tested with unconstrained and constrained stock systems, and clearly demonstrates the advantages of an insourced 3D printer for on-demand printing under constrained stock systems. Neither is AM preferable under an unconstrained system, due to the high costs of purchasing the printer and of production.

How Can Lean Manufacturing Lead the Manufacturing Sector during Health Pandemics Such as COVID 19: A Multi Response Optimization Framework

Lean manufacturing has been used for the last few decades as a process and performance improvement tool. Initially known as Toyota production system (TPS), lean is now used in almost all service and manufacturing sectors to deliver favorable results such as decreased operational cost, increased customer satisfaction, decreased cycle time, and enhanced profits. During the coronavirus disease (COVID 19) pandemic, the manufacturing sector struggled immensely and could not function well even after lockdown was eased in many countries. Many companies found out there are not ready to conform with new regulations made by authorities in many countries. This paper proposes the use of simulation and multi response optimization in addition to other typical lean tools in order to arrive at optimum performance at the end of each project through an established optimization framework. The framework is used in a real case study performed at an aluminum extrusion factory. Lean manufacturing helps organizations to operate with smaller number of resources. It standardizes all processes so that most of the jobs can be done by most of the workers, but this is not enough to create a healthy, sanitized work place. Our framework utilizes the strengths of lean tools and adds pandemic readiness factor to them to ensure improvement in performance and health pandemic readiness. Implementation of the framework in the case company resulted in 50% reduction in labor, $730000 in expected annual cost savings, reduction in inventory levels, improved employee morale and the achievement of pandemic ready status.

Stabilization of two-echelon supply networks with uncertain demand, multiple delays and switching topology using robust control

In this paper, a two-level supply network (SN) system composed of multiple retailers and multiple distributors is developed. The dynamic equations for each echelon are described individually considering the varying possibility of vertical and lateral transshipment of product. Then a SN model is formulated with switched topologies, multiple time-varying delays and uncertain customer demand. By use of the switched Lyapunov stability theory and the average dwell time approach, sufficient conditions of linear matrix inequalities is proposed for the existence of robust $$\hbox {H}\infty $$ state feedback controller. This control strategy guarantee the reduction of inventory levels, delivery rates and orders fluctuations under the worst fluctuation of demand as well as the mitigation of the bullwhip effect (BE). A real case example is presented to demonstrate the effectiveness of the proposed inventory control. The simulation proves that proportionality between vertical and lateral delays as well as cooperation rates have significant impacts on the achievement of best tradeoff between improving inventory dynamics and reducing order fluctuations.

Sales and Operations Planning (S&OP) Concepts and Models under Constraints: Literature Review

Globalization has had a significant impact on company’s management, particularly in the supply chain (lead time, investment in production capacity and technology, organization & management ...). The sales and operations planning (S&OP) include all the processes that link the strategic objectives of the enterprise with the production plan. The impact of the S&OP on operational performance was consistently and significantly demonstrated in the operational aspects of production ; quality (conformity of production, product quality and reliability), delivery (the delivery agility, reliability of supply, manufacturing deadlines, lead times), stocks (reduction of inventory levels, inventory optimization) and flexibility (flexible volume and mix). Our objective in this paper is to present, in the first part, a literature overview of the sales and operations planning, and various research and models developed. In the second part, we will emphasize the transversal aspect of our research that involves both operational issues, tactical and strategic in a context subject to different constraints.

A study on information sharing for supply chains with multiple suppliers

This study considers the coordination of a two-echelon supply chain with multiple suppliers, with which information sharing is essential, since it can often enhance the performance of the supply chain, but may also intensify the competition among members in the chain. In general, information sharing among channel members can improve the efficiency of inventory holding by achieving better quality predictions of demand. Nevertheless, sharing perfect information may often result in the problem of double marginalization; while sharing partial information may result in the problem of distortion between demand and inventory, i.e., the bullwhip effect. This study probes into the impacts of information sharing on inventory reduction and profit gains with consideration of possible promotion activities performed by the retailer, which hinders the suppliers from accurately forecasting the market demand. It is found that, as the demand of successive periods is more correlated, information sharing would have more impact on the reduction of inventory level and total costs of the suppliers, i.e., information sharing is more valuable as the correlation coefficient on successive demand increases.

New product introduction and supplier integration in sales and operations planning

Purpose – The purpose of this paper is to investigate the implementation and performance benefits of sales and operations planning (S & OP) within organizations in Asia Pacific. Design/methodology/approach – A case study method was used, with two companies selected. The first company had recently commenced S & OP and applied it to facilitate new product introduction, while the second had integrated its supplier into an existing S & OP program. Supply chain performance data were collected and analyzed in the context of an S & OP maturity framework. Findings – Both cases show significant improvements in supply chain performance. In one case, the implementation of a common form of S & OP resulted in a 67 percent reduction in order lead time for newly introduced products. The second case demonstrated a 30 percent reduction in inventory levels and a 52 percent improvement in forecast accuracy through more advanced S & OP processes. Research limitations/implications – This paper studies just two companies and is not intended to be representative of outcomes at all companies implementing S & OP. Further studies are required for a more generalized picture of S & OP implementations in the Asia Pacific region to emerge. Practical implications – The findings illustrate the potential quantitative benefits of adopting S & OP and the circumstances under which these benefits may be achieved. The results are also supportive of the notion of a maturity model for S & OP implementations. Originality/value – This paper strengthens the link between practitioner and academic literature by providing empirical evidence of the benefits of S & OP. Furthermore, the findings are derived from the Asia Pacific region for which there have been few academic studies on S & OP to date.

Does the Addition of a Marketing Intermediary Increase the Manufacturer's Profits?

This article will examine whether adding a marketing intermediary can increase a manufacturer's profits, as compared with marketing the product directly to the consumer. Previous studies suggest that cooperation between manufacturers and retailers provides both parties with benefits such as cost reduction , reduction of inventory levels and improved customer service, in addition to higher profits than each party would have achieved on its own. Clearly, the common interests of the two parties surpass the potentia l conflicts between the parties and these common interests should dictate the nature of the collaboration. Herein, using a mathematical model, we show that under certain conditions a manufacturer of durable consumer goods in a vertically integrated supply chain can increase profits by decentralizing, i.e. adding a retail distribution channel. This result holds even if the retailer does not bring unique skills o r knowledge to the relationship or if there is no competition in the product market. We deal with two problems simultaneously: The channel coordination problem and the Coase problem (although we focus on markets in which the manufacturer must sell products rather than lease them). We use a num erical example to demonstr ate an application of our model and we offer directions for future research. Original Research Article

Zeroing in on red cell unit expiry due to age

National Blood Authority identifies age related expiry of red cell units as a significant contributor to wastage of precious voluntary donations. Policy changes to reduce age related wastage can result in significant cost savings and improved inventory management. Aim To evaluate effectiveness of policy (pilot National Inventory Management Framework report) changes to achieve zero wastage of red cell units expiring due to age. Methods Retrospective analysis of age related red cell wastage in Hunter New England Health Service during 12 months preceding and after policy changes implemented since November 2013. Results 1. Inventory levels for red cells decreased by 30.1%. 2. Policy involving age limit (16–28 days) for accepting red cells resulted in 0–2.5% of total red cells received in the main laboratory from peripheral hospitals being older than 28 days, compared to 6–41% previously. 3. Policy changes resulted in zero wastage due to age over last 12 months, while age contributed to 17.8–69.4% of total wastage previously. Total red cell transfusions remained constant. 4. There was no increase in use of emergency couriers. Discussion Key factors for significant reduction in age related wastage were reduction in inventory levels, stock rearrangement and regulations for returning blood products from peripheral hospitals.

An Empirical Analysis of the Impact of Fuel Costs on the Level and Distribution of Manufacturing Inventory in the United States

Abstract While fuel costs have become an important factor in supply chain management, the impact of fuel costs on inventory levels and the distribution of inventories remains unclear. Location theory suggests that firms will relocate inventories to regions with lower fuel costs, leading to lower inventories in the states with higher fuel costs. In contrast, inventory theory suggests that firms will ship orders in greater quantity with less frequency when fuel costs are high, thus resulting in higher inventories in states with higher fuel costs. Using state-level cross-sectional, time-series data for manufacturing industries in the United States during 1994–2006, we empirically examine how fuel price disparities impact the location and dispersion of inventories. Our major findings are that: (1) states with higher fuel costs have lower inventories ceteris paribus; (2) there are lower inventory deviations across states when fuel costs rise; that is, the inventory distribution becomes flatter; and (3) when fuel costs increase, states with higher production output increase their inventories, while states with higher expenditures (as indicated by higher GDPs) experience relative decreases in inventories, suggesting that inventories are relocated from points of demand to points of production. We further quantify that a 1 percent increase in the gasoline price for a state results in a 0.40 percent reduction in inventory levels in the state. Public policy and managerial implications are discussed.

Applied column generation-based approach to solve supply chain scheduling problems

More and more enterprises have chosen to adopt a made-to-order business model in order to satisfy diverse and rapidly changing customer demand. In such a business model, enterprises are devoted to reducing inventory levels in order to upgrade the competitiveness of the products. However, reductions in inventory levels and short lead times force the operation between production and distribution to cooperate closely, thus increasing the practicability of integrating the production and distribution stages. The complexity of supply chain scheduling problems (integrated production and distribution scheduling) is known to be NP-hard. To address the issues above, an efficient algorithm to solve the supply chain scheduling problem is needed. This paper studies a supply chain scheduling problem in which the production stage is modelled by an identical parallel machine scheduling problem and the distribution stage is modelled by a capacitated vehicle routing problem. Given a set of customer orders (jobs), the problem is to find a supply chain schedule such that the weighted summation of total job weighted completion time and total job delivering cost are minimised. The studied problem was first formulated as an integer programme and then solved by using column generation techniques in conjunction with a branch-and-bound approach to optimality. The results of the computational experiments indicate that the proposed approach can solve the test problems to optimality. Moreover, the average gap between the optimal solutions and the lower bounds is no more than 1.32% for these test problems.

Optimizing Inventory Levels Within Intel's Channel Supply Demand Operations

Intel's Channel Supply Demand Operations (CSDO) organization is responsible for satisfying the boxed processor demands of Intel's vast customer network of distributors, resellers, dealers, and system integrators. In 2005, CSDO began a multiechelon inventory optimization (MEIO) project to improve its efficiency and effectiveness by optimizing inventory levels and locations across CSDO's end-to-end supply chain. This paper describes the project plan, workflows, and results. One year after implementation, total inventory levels were reduced by more than 11 percent; in addition, service levels of products modeled using the MEIO process were eight points higher than products not modeled using this process. The MEIO process continues to be in place at Intel and has resulted in sustained reductions in inventory levels, average service levels exceeding 90 percent, and more than an order-of-magnitude reduction in the number of expedites.

The pediatric vaccine stockpiling problem

The U.S. has experienced many major interruptions of its pediatric vaccine production in the past decade. The Centers for Disease Control and Prevention (CDC) copes with these shortages by building a national stockpile of pediatric vaccines, which it makes accessible to the public in the event of a shortage. The management of this stockpile is difficult due to limited production capacity and long and unpredictable production interruptions. In this paper, we address policies for managing the stockpile. We provide sufficient conditions for the optimal policy to be a modified state-dependent base-stock policy, with the base-stock level decreasing in the pipeline inventory. Since the optimal policy is in general difficult to evaluate, we derive bounds on the optimal decision in each period. We develop an efficient policy that performs on average within 1% of optimality in simulations. We show that stocking the same supply of vaccine of every type can be over-conservative in some cases, and inadequate in others by large factors. We also quantify the substantial reduction in inventory level that can be achieved when there are multiple suppliers in the market.

Improving inventory performance with clustering based demand forecasts

PurposeThe purpose of this paper is to develop a forecasting model for retailers based on customer segmentation, to improve performance of inventory.Design/methodology/approachThe research makes an attempt to capture the knowledge of segmenting the customers based on various attributes as an input to the demand forecasting in a retail store. The paper suggests a data mining model which has been used for forecasting of demand. The proposed model has been applied for forecasting demands of eight SKUs for grocery items in a supermarket. Based on the proposed forecasting model, the inventory performance has been studied with simulation.FindingsThe proposed forecasting model with the inventory replenishment system results in the reduction of inventory level and increase in customer service level. Hence, the proposed model in the paper results in improved performance of inventory.Practical implicationsRetailers can make use of the proposed model for demand forecasting of various items to improve the inventory performance and profitability of operations.Originality/valueWith the advent of data mining systems which have given rise to the use of business intelligence in various domains, the current paper addresses one of the most pressing issues in retail management, as demand forecasting with minimum error is the key to success in inventory and supply chain management. The proposed forecasting model with the inventory replenishment system results in the reduction of inventory level and increase in customer service level. The proposed model outperforms other widely used existing models.

Exploring the influence of enterprise resource planning (ERP) implementation on corporate performance using a modified data envelopment analysis (DEA) approach

The benefit of enterprise resource planning (ERP) system for corporate performance is almost ignored at earlier works. To advance earlier researches, this work employs financial data to explore factors of performance advance by illustrating the association between operation management and ERP installation. Atwo-stage analysis is made to achieve the aim. Firstly, input-output efficiency of a firm is evaluated based on a modified data envelopment analysis (DEA) approach, which controls the variations of macroeconomic prosperity among sample years. Secondly, exactly how the embedded modules of ERP systems enhance the input-output efficiency of a firm is then explored by performing Tobin regression analysis. Comparing the input-output efficiency between the pre-ERP and post-ERP periods, the input-output efficiency is proved to be higher in the post-ERP period since firms benefit from shorter turnover days of account receivable and inventories, as well as longer unpaid accounts turnover days after installing ERP. In addition, Tobit regression results indicate that acceleration of account collections, reduction of inventory levels and consulting support of leading vendors improve the input-output efficiency of the firms. This finding suggests that operational improvement owing to implementation of ERP systems increases the corporate performance. Key words: Enterprise resource planning (ERP), leading vendor, tobit regression, data envelopment analysis (DEA), turnover.

Purchase-driven Classification for Improved Forecasting in Spare Parts Inventory Replenishment

Performance of inventory management depends on the accuracy of demand forecasting. There are many techniques used for forecasting demand in retail sale. Advances in data mining application systems have given rise to the use of business intelligence in various domains of retailing. The current research captures the knowledge of classification of the customers using the purchase-based data of customers for improved forecasting. The model developed in this work suggests a technique for forecasting of demands which results in improved performance of inventory. The suggested forecasting model with the inventory replenishment system results in the reduction of inventory level and increase in customer service level. Moreover, the model makes use of purchase driven information instead of customers‟ demographic profile or other personal data for developing the decision tree for forecasting. General Terms Business Intelligence, DSS

Using Dynamic Value Stream Mapping And Lean Accounting Box Scores To Support Lean Implementation

Lean has proven to be an effective management philosophy for improving businesses in a competitive market by eliminating waste and improving operations. An impact of implementing lean projects is the rapid reduction in inventory levels, which gives management the false impression that profits are decreasing while workers on the shop floor observe improvements in operations and increased floor space. This paper explores the literature on lean manufacturing, value stream mapping (VSM), Simulation and lean accounting in order to incorporate and integrate them for the purpose of solving the dilemma between lean implementation benefits and financial and accounting reporting methods.

Collaborative Supply Chain in the Digital Age: A Case Study of its Extent of Adoption by Indigenous Organizations in Building Inter-and Intra-firm Alignments

The term collaborative supply chain or SCM is a social software package that promises inter-and intra-firm alignments and information sharing to assure outstanding performance of the whole. It involves integrating resources and automating transactions across traditional boundaries to build mutually benefiting competitive advantage. SCM in the digital age encompasses accessibility of internal activities and measurement metrics by external parties as well as optimization of processes for mutual improvement in customer service, and reduction of inventory level and associated cost; good business relationships built on trust and minimized selfishness; and long term flexibility and adaptability evidenced by co-creation of products along the value chain. Apparently, experience has shown too many firms avoid engagement in this extensive supply chain integration, perhaps for fear of breeding conflicts. The paper viewed the current practice of SCM by studying the experiences and insights of 108 managers/officers, drawn from eight indigenous firms. The benchmark for selection was that the subject must be directly involved in supply chain initiatives and case study interviews were used for the survey. The finding unravelled discrepancy between the ideals of theories of SCM and actual practice; no consensus about its meaning, multiple supply chain collaboration compounds the problem even the more, and most times it may be difficult to meet the laid down conditions. Firms easily embrace internal cross functional integration and shun inter-organizational integration, perhaps because they want to build unique competitive advantage. Therefore more orientations should be done to educate managers on the ideals of SCM, especially on the area of dissuading selfish maximization of profits.

Modelling the tradeoff between postponement capacity and forecast accuracy

The ability to offer rapid delivery of a wide variety of customised products requires companies to maintain high levels of product inventories to quickly respond to customer demands. One alternative for reducing final product inventories while providing the required customer service level is delayed product differentiation, known as postponement. This strategy, however, can result in significant costs of increasing capacity at the postponement stage. Another alternative is to improve forecast accuracy, resulting in costs associated with more sophisticated forecasting methodologies. In this study we model the costs associated with each alternative and the resulting reductions in inventory levels, while maintaining a constant service level. We illustrate the interaction between these variables using a numerical example motivated by our work with a local manufacturer of non-durable household goods. Our findings show that large cost differences can exist between the two strategies, and that these costs play a significant role in determining the best strategy. Also, the value of the product (through holding cost) sets a limit on the benefit that can be realised by either strategy. These results have important managerial implications that should be considered when making the postponement decision.

Integration of web‐based and RFID technology in visualizing logistics operations – a case study

PurposeTo provide a new generic model equipped with a “process visualizing” feature by capturing RFID logistics data to represent different logistics processes' status, and sharing them through web‐based technology to supply chain parties.Design/methodology/approachIn order to provide logistics service companies an effective way to manage their logistics processes and help both the up and down stream supply chain parties maximize their activities linkage within the value chain, the proposed system integrates radio frequency identification (RFID) and IT applications to optimize information flow in a supply chain. In doing so, the objective of visualizing logistics process is achieved.FindingsIt is found that the proposed model enhanced the performance of third party logistics providers and their supply chain partners in three main areas. They include a significant reduction in inventory level, a substantial drop in the chance of out‐of‐stock and, a significant improvement in the efficiency of delivery. They are among the most critical problems that often exist in a supply chain.Research limitations/implicationsThe proposed model requires supply chain participants to share their process data on the web environment so as to achieve the target of collaboration. This demands the need of tight security control over the public internet.Practical implicationsThis paper provides useful information and practical guidance for supply chain participants to formulate a “process visualizing featured” information system.Originality/valueThis paper provides a solution to solve common supply chain management problems and offers practical helps to supply chain participants effectively.