Abdullah Dasci

A continuous model for production-distribution system design

Abstract The production–distribution system design problem (PDSDP) involves decisions concerning the structure of a firms supply chain. An overwhelming majority of the literature uses mixed integer programming formulations in representing such facility design decisions. In this paper, we present an alternative modeling framework, which is based on the use of continuous functions to represent spatial distributions of cost and customer demand. The proposed continuous model allows the derivation of a number of insights about the impact of problem parameters on facility design decisions. It is proposed that discrete and continuous modeling approaches complement each other.

The plant location and flexible technology acquisition problem

Abstract In many industries, production–distribution networks have become more complex due to globalization. In particular, increasing interdependencies among structural decisions call for the development of integrated models. In this paper, we present a mathematical model for simultaneous optimization of the plant location, capacity acquisition and technology selection decisions in a multi-commodity environment. The proposed model represents the possible scale and scope economies associated with manufacturing technology alternatives. The problem is formulated as a mixed integer nonlinear program with concave costs. We developed an exact and three heuristic solution procedures. Using these procedures, we are able to solve fairly large facility design problems with reasonable computational effort.

The plant location and technology acquisition problem

This paper presents an analytical approach for simultaneous optimization of the plant location, capacity acquisition and technology selection decisions in a multi-product environment. The proposed approach can be useful when there is considerable interaction between these structural decisions e.g., in global manufacturing companies. We present a formal definition of the plant location and technology acquisition problem and provide a mathematical model. We describe the analytical properties of the model, which lead to the development of a solution algorithm. Progressive piecewise linear underestimation constitutes the backbone of our solution algorithm. The arising subproblems are amenable to a dual-based approach. We report on a set of experiments that improved our understanding of the interaction among facility design decisions and showed that the computational performance of the proposed solution procedure is quite satisfactory.

Performance evaluation of a single-stage two-product manufacturing system operating under pull-type control

This paper presents a model to analyze a manufacturing system that is operating under pull-type control. A Markovian polling model with finite queues is devised to represent the manufacturing system and studied under three cyclic service policies: exhaustive, gated, and a type of limited policy. These polling models are solved by two different methods: an exact approach that requires the complete characterization of the system as a Markov chain and a decomposition approach that reduces the size of the Markov chain. A set of numerical experiments show that the decomposition approach is quite accurate in estimating system performance measures.

An analytical approach to the facility location and capacity acquisition problem under demand uncertainty

This article presents an analysis of facility location and capacity acquisition under demand uncertainty. A novel methodology is proposed, in which the focus is shifted from the precise representation of facility locations to the market areas they serve. This is an extension of the optimal market area approach in which market area size and facility capacity are determined to minimize the total cost associated with fixed facility opening, variable capacity acquisition, transportation, and shortage. The problem has two variants depending on whether the firm satisfies shortages by outsourcing or shortages become lost sales. The analytical approach simplifies the problem considerably and leads to intuitive and insightful models. Among several other results, it is shown that fewer facilities are set up under lost sales than under outsourcing. It is also shown that the total cost in both models is relatively insensitive to small deviations in optimal capacity choices and parameter estimations.

Linear location-inventory models for service parts logistics network design

We present two integrated network design and inventory control problems in service-parts logistics systems. Such models are complicated due to demand uncertainty and highly nonlinear time-based service level constraints. Exploiting unique properties of the nonlinear constraints, we provide an equivalent linear formulation under part-warehouse service requirements, and an approximate linear formulation under part service requirements. Computational results indicate the superiority of our approach over existing approaches in the literature.

Conditional Location Problems on Networks and in the Plane

Location decisions are of critical importance to all firms. Opening, closing, and relocating facilities require careful planning due to the strategic nature of these decisions. When customers do not have physical contact with the facilities (such as plants, distribution centers, or call centers), demand for the products or services can be assumed to be relatively independent of location. However, location choices of some stores (such as coffee shops, supermarkets, bank branches, and restaurants) do have a direct impact on demand. Therefore, such decisions should not be made without consideration of consumer behavior and market conditions.

Evaluation of Plant Focus Strategies: A Continuous Approximation Framework

The concept of plant focus emphasizes a firms ability to increase productivity and lower cost by limiting the number and variety of operations at its production lines. In this paper, we present a quantitative modeling framework to analyze the choice between product focus and market focus strategies. We also study the effect of flexible manufacturing technology on plant focus. Our methodology is based on a facility design model that uses continuous functions in representing the spatial distribution of demand and cost parameters. One of the advantages of this approach is its ability to generate closed-form solutions with relatively little data. Furthermore, it enables us derive several managerial insights into plant focus decisions as well as the impact of technology alternatives on these decisions. Finally, continuous approximation approach has potential to complement more detailed mixed integer models.

Two-period dynamic versus fixed-ratio pricing in a capacity constrained duopoly

This paper analyzes the impact of dynamic and fixed-ratio pricing policies on firm profits and equilibrium prices under competition. Firms that have equal inventories of perfectly substitutable and perishable products compete for customer segments that demand the product at different times. In each period, customers first purchase from the low price firm and then from the high price firm up to their inventories, provided the prices are lower than the maximum they are willing to pay. The main conclusions of this paper are as follows: although dynamic pricing is a more sophisticated policy than fixed-ratio pricing, it may lead to decreased equilibrium profits; under both pricing policies, one firm assumes the role of a low-cost high-output firm while the other assumes the role of a high-cost low-output firm; and, the supply demand ratio has more impact on the outcome of the competition than the heterogeneity in consumer reservation prices.

Erratum to “A Continuous Model for Multistore Competitive Location”

In Dasci and Laporte (2005), we present a model in a multi tore competitive l cation environment. W develop the model by shifting the issue from competition on pre cise location decisions to competition over location density decisions. The intent of this note is to correct an error in one of the intermediate calculations and its impact on some of the subsequent results. We thank Hans-Peter Ziegler and Stefan Nickel of Saarland University, who discovered the error and brought it to our attention. To describe the error and its correction, we reconsider the leaders problem and its proposed solution given in Equations (18) and (19) of Dasci and Laporte (2005). The leaders problem is given as