Shipping Policy Research Articles

The External Dimension of European Union Marine Governance: Institutional Interplay between the EU and the International Maritime Organization

This article focuses on the emergence of a decentralized institutional complex, interplay management, and the institutional interplay between the International Maritime Organization (IMO) and the EU in the issue area of environmental shipping policies. It shows that the synergistic relationship between both institutions has been driven primarily by commitment and compliance mechanisms. By influencing IMO decision-making and improving the implementation and effectiveness of IMO conventions, the EU has become a driving force in international environmental shipping policies, and its new initiatives may even enhance its leadership role within the IMO in the future. Despite the still-existing lack of cognitive leadership by the EU, the synergies between both institutions provide evidence for the EU's leadership capacities in global environmental politics.

Lot sizing and unequal-sized shipment policy for an integrated production-inventory system

This article develops a single-manufacturer single-retailer production-inventory model in which the manufacturer delivers the retailer’s ordered quantity in unequal shipments. The manufacturer’s production process is imperfect and it may produce some defective items during a production run. The retailer performs a screening process immediately after receiving the order from the manufacturer. The expected average total cost of the integrated production-inventory system is derived using renewal theory and a solution procedure is suggested to determine the optimal production and shipment policy. An extensive numerical study based on different sets of parameter values is conducted and the optimal results so obtained are analysed to examine the relative performance of the models under equal and unequal shipment policies.

Inventory allocation and shipping when demand temporarily exceeds production capacity

We address the concept of an integrated inventory allocation and shipping model for a manufacturer with limited production capacity and multiple types of retailers with different backorder/waiting and delivery costs. The problem is to decide how to allocate and deliver produced items when the total retailer demand exceeds the production capacity, so that total retailer backorder and delivery costs are minimized. Our analytical model provides optimal allocation and shipping policies from the manufacturer’s viewpoint. We also investigate the allocation strategy of a manufacturer competing with other retailers to directly sell to end consumers.

An integrated production and inventory model for a system comprising an assembly supply chain and a distribution network

This study investigates the production and inventory problem for a system comprising an assembly supply chain and a distribution network. A uniform lot size is produced uninterruptedly with a single setup at each production stage. Equal-sized batch shipment policy is applied to the whole system and the number of batches can be varied. All retailers have agreed on a joint replenishment policy with a common replenishment cycle. The objective is to determine the optimal common replenishment cycle, the number of batches of each production stage and retailer, all of which minimises the integrated total cost. Moreover, a new concept is introduced; namely, critical replenishment cycle. The replenishment cycle division (RCD) and recursive tightening (RT) methods are then developed to obtain the optimal solutions to the subject problem. Two theorems are verified to ensure the solutions obtained by the RCD and RT methods reaching the global optimum. An example is presented to illustrate the procedures involved in the RCD and RT methods.

위그선의 연안여객운송시장 도입을 위한 정책 연구

The purpose of this study is to review and suggest coastal shipping policies for introduction of WIG craft into domenstic passenger shipping market. Two Korean companies are leading in the development of WIG craft as an innovative sea transportation vehicle, and it is awaiting for commercialization. WIG craft is expected to be commercialized from coastal passenger market and we used AHP method to investigate the major factors and its` priority for smooth market entry. The results shows that priorities are on the WIG craft legislation, dock installation and operation, port state control, and pilot hiring and training, craft maintenance, and ship`s certification in order.

Stochastic models for the coordinated production and shipment problem in a supply chain

In this study, we consider the coordination of transportation and production policies between a single supplier and a single retailer in a stochastic environment. The supplier controls the production, holds inventory and ships the products to the retailer to satisfy the external demand. We model the system as a Markov decision process, and show that the optimal production and transportation decisions are complex and non-monotonic. Therefore, we analyze two widely-used shipment policies in the industry as well, namely time-based and quantity-based shipment policies in addition to a hybrid time-and-quantity based shipment policy. We numerically compare the performances of these policies with respect to the optimal policy and analyze the effects of the parameters in the system.

Intra-supply chain system with multiple sales locations and quality assurance

The emergence of the global economy has transformed the interdepartmental nature of a transnational enterprise into a highly collaborative oriented team. This transformation enables the enterprise to lower its transaction and coordination costs and increase its competitive advantage in the global market. This study investigates such a so-called intra-supply chain system that exists in present-day transnational firms, wherein a single production unit manufactures products to meet the demands of multiple regional sales offices and incorporates quality assurance in its production. The objective of the present study is to determine an optimal production quantity and shipment policy that minimizes the integrated production–inventory–delivery costs for the intra-supply chain system. In this study, considerations related to a product’s quality assurance include inspection for quality, rework of defective items and failure in rework. Delivery of the finished products starts when quality of the entire production lot is assured. Multi-shipment policy is used to synchronously transport finished items to multiple locations for satisfying customer demands in each cycle. Mathematical modeling along with Hessian matrix equations is employed to solve the proposed intra-supply chain system. A numerical example with a discussion and cost-benefit analysis of outsourcing work to an external distributor is presented to demonstrate the practical applicability of the obtained results.

Using market intelligence for the opportunistic shipping of fresh produce

Abstract The main goal of this paper is to develop an opportunistic shipment policy that increases a farmer's commercialization reach within a secondary market with minimal or no capital investment, once a base market has been established. Basically, the operation would consist of sending fresh produce items into a secondary market (from the base) whenever momentary price differentials allows two-market transactions with a high probability of profit. A theoretical model is developed that maximizes potential operational revenues based on arbitrage opportunities existent within two-market structures. Ultimately, the validity and applicability of this model is demonstrated through the application of a case-study. The results of the case-study show that using the decision-making strategy defined by the proposed theoretical model cannot only increase the long-term profits of two-market operations but can also lower the profit variability, in comparison to only commercializing in a single base market.

Return Shipping Policies of Online Retailers: Normative Assumptions and the Long-Term Consequences of Fee and Free Returns

To limit costs associated with product returns, some online retailers have instituted equity-based return shipping policies, requiring customers to pay to return products when retailers determine that customers are at fault. The authors compare the normative assumptions about customers that underlie equity-based return shipping policies with the more realistic, positivist expectations as predicted by attribution, equity, and regret theories. Two longitudinal field studies over four years using two surveys and actual customer spending data indicate that retailer confidence in those normative assumptions is unjustified. Contrary to retailer assumptions, neither the positive consequences of free returns nor the negative consequences of fee returns were reversed when customer perceptions of fairness were taken into account. Depending on the locus and extent of blame, customers who paid for their own return decreased their postreturn spending at that retailer 75%–100% by the end of two years. In contrast, returns that were free to the consumer resulted in postreturn customer spending that was 158%–457% of prereturn spending. The findings suggest that online retailers should either institute a policy of free product returns or, at a minimum, examine their customer data to determine their customers’ responses to fee returns.

Optimal Mixed Batch Shipment Policy with Variable Safety Factor for the Single-Vendor Single-Buyer Production-Inventory System

This study investigates the production and inventory problem involving stochastic demand in a single-vendor single-buyer integrated system. The stochastic model is constructed and is controlled by both the reorder and shipping points with mixed geometric and equal batch shipment policy and variable safety factor. The minimum cost model is transformed into the maximum order quantity model. Consequently, the structure of mixed geometric and equal shipments can easily be obtained. The structure of the mixed geometric and equal shipments comprises number of batches, number of geometric shipments, and ratio of equal sized shipments to the size of the first shipment. The problem is solved using the proposed algorithm that determines the economic lot size, the structure of the mixed geometric and equal shipments, and the safety factor. An illustrative example demonstrates the effectiveness of the algorithmic procedures.

Logistics planning and inventory optimization using swarm intelligence: a third party perspective

The economic and competitive pressures have made it imperative for organizations to focus on third party or outsourcing to reduce costs and improve operating efficiencies. The thrust of global economy drives the organizations to outsource process, parts, and labor, virtually anywhere in the world and get the desired combination of low cost and high quality. However, ineffective utilization of shipment practices in supply chain prevents to achieve the anticipated outsourcing benefits. In this research, a three-stage inventory model is developed to address the outsourcing issues with different shipment policies between manufacturer, exporter, and assembly point for any manufacturing industry. The model provides a measure for establishing an optimal balance between two conflicting objectives viz. net costs involved and the transportation discounts with consideration of holding cost at all the points in the supply chain. Owing to inherent computational complexities of the problem with higher dimensions, various deterministic approaches practically fail. Proposed work, therefore, utilizes a nature-inspired evolutionary algorithm, namely particle swarm optimization, to solve the problem. This paper applies enhanced particle swarm optimization, a variant of particle swarm optimization for solution purpose. Furthermore, the practical benefits and implications of the proposed model are demonstrated. The results obtained delineate efficacy to handle the fluctuations in the possible shipment options and simultaneously deciding the optimal shipment policies.

Single supplier single retailer inventory model controlled by the reorder and shipping points with sharing information

This study investigated the integrated stochastic inventory problem for a two-stage supply chain consisting of a single retailer and a single supplier. By using batch shipment policy, the expected total cost can be significantly reduced. An equally sized batch shipment model, controlled by both the reorder and shipping points, with sharing information by enterprise resource planning and radio frequency identification is constructed. The problem is solved optimally by the proposed algorithm that determines the economic lot size, the optimal batch sizes and number of batches. A numerical example is included to illustrate the algorithmic procedures and to prove that the model controlled both by the reorder and shipping points is superior to the classic model controlled only by the reorder point.

RESEARCH ON THE ORDERING STRATEGY OF RETAILERS UNDER A FREESHIPPING POLICY PROVIDED BY SUPPLIERS

With the rapid development of E-commerce,more and more E-commerce companies use free shipping strategy.Based on a two-stage supply chain consisting of one supplier and one retailer,the paper analyzes the ordering strategy of retailer under two different policies,free shipping policies against quantity and against value.The best ordering strategy a retailer will take to maximize its interest is proposed.The obtained result will be useful for retailers to work out ordering strategy in the E-commerce transaction practice.

Joint determination of lot-size and shipment policy for a vendor-buyer system with rework and an improving delivery plan

This paper studies a vendor-buyer integrated system with rework and an improving delivery policy for lowering both vendor and buyer’s stock holding costs. The objective is to derive the optimal production lot size and number of deliveries that minimizes total costs for the proposed vendor-buyer integrated system. This study extends the work of Chiu et al. (2011) by incorporating an improving n+1 shipment policy into their model, with the purpose of reducing both vendor and buyer’s stock holding costs. Under such an enhancing policy, one extra upfront delivery of finished items is distributed to buyer for satisfying product demand during supplier’s production and rework times. Then, fixed quantity (n) installments of finished items are delivered to customer at the end of rework. Mathematical modeling along with Hessian matrix equations is employed to derive and prove convexity of the long-run cost function. Closed-form solution in terms of lot size and number of deliveries is obtained. A numerical example is provided to show its practical usage and demonstrate significant reduction in stock holding cost. Key words: Production lot size, vendor-buyer system, multi-deliveries, rework.

An optimal policy for a single-vendor single-buyer integrated inventory system based on vendor's strategy of shipments to buyer

This paper considers a single-vendor single-buyer integrated inventory system subject to the vendor’s delivery policy of n shipments to the buyer. The vendor delivers to the buyer as soon as the shipment sized quantity is produced. The optimal solution of the model is obtained by minimising the average total cost of the integrated system. The model is demonstrated with a numerical example. A comparison of the optimal results with those of an existing vendor-buyer model based on the vendor’s different shipment policy under the same modelling framework is made. Sensitivity analysis with respect to some key parameters of the model is also carried out.

An integrated inventory model for single vendor multi customer scenario with multiple shipments in a supply chain

The present study focuses on determining the economic ordering quantity (EOQ) and shipping strategy of an inventory system that is integrated with a single-product, single-vendor and multi-customer scenario. Depending on the demand of all customers, production and shipping policies are determined and a suitable model is presented to illustrate the transfer of unequally-sized batches in a lot. Optimum values for the decision variables are determined using a direct search method. To justify the lot-splitting solution approach for the integrated inventory problem, an alternative model with no lot splitting is devised and tested under the same conditions which produced similar or better results. A numerical example and the related sensitivity analysis are presented to show the effectiveness of the proposed model.

Determining replenishment lot size and shipment policy for an extended EPQ model with delivery and quality assurance issues

This paper derives the optimal replenishment lot size and shipment policy for an Economic Production Quantity (EPQ) model with multiple deliveries and rework of random defective items. The classic EPQ model assumes a continuous inventory issuing policy for satisfying demand and perfect quality for all items produced. However, in a real life vendor–buyer integrated system, multi-shipment policy is practically used in lieu of continuous issuing policy and generation of defective items is inevitable. It is assumed that the imperfect quality items fall into two groups: the scrap and the rework-able items. Failure in repair exists, hence additional scrap items generated. The finished items can only be delivered to customers if the whole lot is quality assured at the end of rework. Mathematical modeling is used in this study and the long-run average production–inventory-delivery cost function is derived. Convexity of the cost function is proved by using the Hessian matrix equations. The closed-form optimal replenishment lot size and optimal number of shipments that minimize the long-run average costs for such an EPQ model are derived. Special case is examined, and a numerical example is provided to show its practical usage.

Exploratory analysis of free shipping policies of online retailers

Online retailers (or Internet divisions of brick and mortar retailers) often offer shipping discounts (for example “free shipping on orders above $150”) to entice customers. The premise is that the retailer will attract more customers and these customers will likely buy more per order to avail the shipping discount, increasing total revenues and profits. In parallel, the retailer must also plan the replenishment of items sold during the free shipping promotion. This paper provides an exploratory model that analyzes (a) what form a retailer should use the free shipping promotion, and in parallel, (b) how the retailer should plan for replenishment from their suppliers.

English

This paper examines impacts of random scrap rate on production system in supply chain environment with a specific n+1 distribution policy. The purpose of introducing such a specific shipping policy is to cut down inventory holding costs for both producer and customer in vendor-buyer supply chain environment. Mathematical modeling along with Hessian matrix equations is used to simultaneously determine the optimal policies for production lot-size as well as number of shipments first. Then impacts of random scrap rate on the proposed system are analyzed. Numerical example is provided to show its practical usage and to demonstrate impacts of scrap rate on the system.   Key words: Imperfect production system, random scrap rate, replenishment lot size.

EOQ models for a coordinated two-level international supply chain considering imperfect items and environmental impact

Abstract For a two-level supply chain, models are presented to determine the optimal production–shipment policy for items with imperfect quality in three different scenarios: (a) both the vendor and the buyer are in the same country, (b) the vendor and the buyer are in different countries where the stochastic behavior of the exchange rate between the two countries is modeled using a mean-reverting process, and (c) environmental impact is incorporated in determining the optimal production–shipment policy by taking into account the fixed and variable carbon emission costs. The objective is to minimize the total expected cost per unit time. For each scenario, considering equal shipment size, the total expected cost per unit time is derived and the solution procedure is proposed. Numerical examples are presented and the results are discussed.