Strategic Inventory Placement In Large Scale Multi Echelon Networks
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Strategic Inventory Placement In Large Scale Multi Echelon Networks
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Author : Josef Svoboda
language : en
Publisher:
Release Date : 2022
Strategic Inventory Placement In Large Scale Multi Echelon Networks written by Josef Svoboda and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2022 with categories.
The placement and sizing of safety stocks in supply chains pose a challenging optimization problem. State-of-the-art multi-echelon inventory optimization models, such as the guaranteed-service approach, are non-linear and depend on statistical, time-series-based approaches that require distributional and parametric assumptions. We propose a data-driven, non-parametric and distribution-free approach for safety stock planning in multi-echelon inventory networks that utilizes historical demand and feature data. We extend data-driven optimization in inventory control from newsvendor models to multi-period and multi-echelon problems. Our model accommodates general, acyclic multi-echelon networks and simultaneously determines safety stock allocation and sizing by setting cost-optimal base stocks for all stages under consideration of service requirements. By developing a mixed-integer programming formulation and a Benders decomposition method, we offer a novel methodological approach to a well-studied problem that can be solved with commercial mathematical programming solvers. We also provide a probabilistic analysis of the data-driven performance relative to an oracle solution when sample data is limited. We show that the mixed integer programming approach is scalable by solving 38 large-scale supply chain benchmark networks with assembly, distribution, and general structures.
Strategic Inventory Placement In Multi Echelon Supply Chains
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Author : Tor Ivar Schoenmeyr
language : en
Publisher:
Release Date : 2008
Strategic Inventory Placement In Multi Echelon Supply Chains written by Tor Ivar Schoenmeyr and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2008 with categories.
(cont.) In a case study, we obtained data from the supply chain of an electronic test system, as well as characterized the forecasting process. We found that incorporating the forecast process led to 25% reduction of safety stocks.
Assessing The Impact Of Strategic Safety Stock Placement In A Multi Echelon Supply Chain
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Author :
language : en
Publisher:
Release Date : 2004
Assessing The Impact Of Strategic Safety Stock Placement In A Multi Echelon Supply Chain written by and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2004 with categories.
The objective of this study is to develop prescriptions for strategically placing safety stocks in an arborescent supply chain in which there are moderate to severe risks of disruptions in supply. Our work builds off of recently published work by Graves and Willems (2003) that demonstrates that a simple-to-compute, congestion-based adjustment to supply lead times, first developed by Ettl et al. (2000), can be embedded in a non-linear optimization problem to minimize total investment in safety stock across the entire supply chain. We are interested in investigating how the Graves and Willems (GW) model performs under uncertainty in supply. We first propose an adjustment to the model (Mod-GW) by considering two types of fulfillment times, a normal fulfillment time and a worst possible fulfillment time, which allows us to account for supply uncertainty, or disruptions in supply. We evaluate the performance of GW and Mod-GW using Monte Carlo simulation and, using motivation from Timed-Petri Net analysis, develop an Informed Safety Stock Adjustment (ISSA) algorithm to compute the additional buffer stock levels necessary to improve downstream service performance to the target level. We find that the service performance of the Mod-GW solution is most sensitive to the probability of disruption at any node in the supply chain, requiring higher safety stock adjustments through ISSA as this probability increases. In particular, the relative value of the holding costs for components and finished goods--and the resulting impact on where safety stock is held in the network--is an important moderating factor in determining the level of service performance degradation of the Mod-GW solution as either, the probability of disruption at node j, or, the ratio of the disrupted and normal lead times, increases (i.e., as disruptions exert more impact on the network). The Informed Safety Stock Adjustment algorithm generally suggests a sufficient complementary amount to the saf.
Multi Echelon Inventory Strategies For A Retail Replenishment Business Model
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Author : Benjamin Michael Polak
language : en
Publisher:
Release Date : 2014
Multi Echelon Inventory Strategies For A Retail Replenishment Business Model written by Benjamin Michael Polak and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2014 with categories.
The mission of the Always Available retail replenishment business at NIKE is to ensure consumer-essential products are in-stock at retailers at all times. To achieve this goal, NIKE has developed a forecast-driven, make-to-stock supply chain model which allows retailers to place weekly orders to an on-hand inventory position in a distribution center. The challenge facing the business is how to design an inventory strategy that achieves a high level of service to its customers while minimizing inventory holding cost. Specifically, safety stock holding cost is targeted as it accounts for the majority of on-hand inventory and can be reduced without significantly impacting the underlying supply chain architecture. This thesis outlines the application of multi-echelon inventory optimization in a retail replenishment business model. This technique is used to determine where and how much safety stock should be staged throughout the supply chain in order to minimize safety stock holding cost for a fixed service level. Provided a static supply chain network, the ideal safety stock locations and quantities which result in minimal total safety stock holding cost is determined. For this business, the optimal solution is to stage lower-cost component materials with long supplier lead times and high commonality across multiple finished goods at the manufacturer in addition to finished goods at the distribution centers. Safety stock holding cost reduction from component staging increases significantly when the distance between manufacturers and the distribution center decreases and for those factories producing a variety of finished goods made from the same component materials due to inventory pooling. Forecast accuracy drives the quantity of safety stock in the network. The removal of low volume, highly unpredictable products from the portfolio yields significant inventory holding cost savings without a detrimental impact to revenue. By deploying the optimal safety stock staging solution and by removing unpredictable products, this analysis shows that finish goods safety stock inventory would be reduced by 35% for the modeling period (calendar year 2012) while only decreasing topline revenue by 5%.
A Multi Echelon Supply Chain Model For Strategic Inventory Assessment Through The Deployment Of Kanbans
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Author : Philip James Hodge
language : en
Publisher:
Release Date : 2008
A Multi Echelon Supply Chain Model For Strategic Inventory Assessment Through The Deployment Of Kanbans written by Philip James Hodge and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2008 with categories.
As global competition in the manufacturing space grows, so do corporations' needs for sophisticated and optimized management systems to enable continuous flows of information and materials across the many tiers within their supply chains. With the complexities introduced by the variability in the demand for finished goods as well as by the variability in lead-time of transportation, procurement, production and administrative activities, corporations have turned to quantitative modeling of their supply chains to address these issues. Based on the data of a heavy machinery manufacturer headquartered in the US, this research introduces a robust model for the deployment of strategic inventory buffers across a multi-echelon manufacturing system. Specifically, this study establishes a replenishment policy for inventory using a multiple bin, or Kanban, system for each part number in the assembly of products from our sponsors tractor line. We employ a numerical simulation to evaluate and optimize the various inventory deployment scenarios. Utilizing several thousand runs of the simulation, we derive a generalized treatment for each part number based on an econometric function of the parameters associated with lead-time, order frequency, inventory value and order costing. The pilot for the simulation focuses on the parts data for three earthmoving products across eight echelons, but scales to n products across m echelons. Our results show that this approach predicted the optimal quantities of Kanbans for 95% of parts to a level of accuracy +/- 3 bins.
Assessing The Impact Of Strategic Safety Stock Placement In A Multi Echelon Supply Chain
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Author : Elena Alexandrovna Bryksina
language : en
Publisher:
Release Date : 2005
Assessing The Impact Of Strategic Safety Stock Placement In A Multi Echelon Supply Chain written by Elena Alexandrovna Bryksina and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2005 with categories.
Keywords: risk and safety stock, safety stock placement, supply uncertainty, disruptions in supply chain.
Deep Reinforcement Learning For Large Scale Inventory Management
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Author : Xiaotian Liu
language : en
Publisher:
Release Date : 2023
Deep Reinforcement Learning For Large Scale Inventory Management written by Xiaotian Liu and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2023 with categories.
The boom of the e-commerce industry in recent years prompts the focus of inventory management into large-scale problems with multiple products and multi-echelon supply chains. This work introduces a simulation-driven solution for large-scale inventory problems, where deep reinforcement learning (DRL) is used as the central technique and deep learning (DL) is exploited to assist the training of the associated neural network. We first investigate a single-echelon multi-product problem as a representative of relatively simple inventory models with ex-post optimal or sub-optimal policies. Using training samples generated by simulation, a DL model is first trained by imitating a target policy, after which a DRL procedure is applied to fine-tune the DL model for further improvement. The numerical results on real-life data from a leading e-commerce company show that our method outperforms conventional base-stock policies and an existing DL method with regard to average operational cost. Then, we formulate a multi-echelon multi-product problem with a practical two-level warehouse network and shared storage resources as a representative of hard inventory models without available heuristic solutions. In this case, a DRL model is trained based on feedback from simulation. The numerical results on real-life data show that our method is capable of constructing intelligent ordering policies that involve coordination among stages and outperforms three combined heuristics adapted to this problem in operational cost.
Inventory Positioning Strategies In Multi Echelon Distribution Systems
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Author : Peter Michael Arnold
language : en
Publisher:
Release Date : 1992
Inventory Positioning Strategies In Multi Echelon Distribution Systems written by Peter Michael Arnold and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1992 with Inventory control categories.
Network Design And Safety Stock Placement For A Multi Echelon Supply Chain
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Author : Hitesh Gupta
language : en
Publisher:
Release Date : 2008
Network Design And Safety Stock Placement For A Multi Echelon Supply Chain written by Hitesh Gupta and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2008 with categories.
With the increasing complexities in supply chains and increasing global trade, integrated supply chain network design is utilized by the firms in order to reduce the overall cost while meeting the customer demand with requisite levels of service. This view of collaborative approach towards supply chain design has the potential of providing competitive edge for the firms in a highly competitive environment with high variability of end customer demand. In this study we present a framework for the design of a multi echelon supply chain network facing uncertain demand. We develop a comprehensive procedure for the optimization of a multi echelon supply chain. We provide the details of each step to describe the methodology and develop mathematical models for the design of a multi echelon distribution network. The procedure has been developed for the design of network flow and the placement of safety stock for a multi echelon distribution network.
Developing A Long Term Strategy For A Warehouse Network
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Author : Patrick Allen Johnson
language : en
Publisher:
Release Date : 2017
Developing A Long Term Strategy For A Warehouse Network written by Patrick Allen Johnson and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2017 with categories.
This thesis addresses the question of how to create a pro-active, long term, network centric warehouse strategy. This thesis will present an inventory model built to understand the capacity needs of Amgen's warehouses over the time period of 2017-2023 to support this mission, along with recommendations based on scenario analysis from this model to analyze and quantify the impacts of multiple scenarios in support of an efficient, effective, nimble supply chain. With worldwide operations supporting a global customer base, Amgen's operational philosophy is to ensure serving "every patient, every time". Amgen's warehouses play a vital role with this mission, storing raw materials to ensure production with safety stock and various levels of Work in Progress (WIP) based not only on operational safety stock, but also strategic safety stock to ensure demand is always met, even with unforeseen risks. In order to understand the impacts of growth on warehouse utilization, a relational database inventory model was created and linked to the long range forecast of supply and demand. This inventory model linked the Bill of Materials (BOMs) to the product forecast in order to to understand the quantity of raw materials required to meet the supply. The database also calculates the WIP and finished product levels of Amgen's products. This model considers inefficiencies in the warehouses, as warehouse pallet spaces do not always store the maximum capacity of the material. This inventory model calculated the capacity required for each warehouse over the forecasted ranges of FY 2016 to FY 2023. The findings of this model were used to create Amgen's long term warehouse strategy. The model demonstrated a +- 10% accuracy to 2017 planning. We developed a strategy that mimics Amgen's operational strategy. Amgen's operational strategy is to reduce fixed costs, and focus on flexibility with variable based costs. Based on this, we found the best strategy was to work with 3rd party logistics providers (3PLs) to mitigate the capacity gaps in a variable based manner. This option is preferred over investing in expanding capacity at warehouses already in use for all three scenarios of optimistic, baseline, and pessimistic demand profiles. The biggest lever to gain warehouse capacity is to improve inventory policies and the flow of communication. Inventory policies whose aim is to reduce inventory can be viewed as a sensitive topic at a company like Amgen. But, if done in a scientific manner, and moving from a Months on Hand (MOH) approach to a scientifically calculated inventory, then moving to a multi-echelon inventory optimization, inventory and risk can be reduced. The following are ways that can be used to reduce inventory and risks. -- Track forecast error to understand variation of demand -- Lead time reduction of raw materials and work in progress -- Risk Pool Drug Product (DP) "nude" vials and decrease lead time from DP to customer -- Re-order point frequency increases -- Reduction of demand variability through: -- -- Better communication of demand forecasts between marketing, global supply chain and site supply chain teams. -- -- Reducing variability of manufacturing planning -- Seek commonality of raw materials to lower safety stock levels -- Multi-Echelon Inventory Optimization By accomplishing these activities, Amgen has a scope to reduce 3PL storage requirements by 20k pallet-year spaces over the same time period. This will lower the expense of 3PL costs, and overall risks, over the same time period by $11 M. Considerable work will have to be accomplished, but the benefits will outweigh the costs.