Avijit Banerjee

Application of Analytical Hierarchy Process in Operations Management

The use of Analytical Hierarchy Process (AHP) is an effective way to deal with qualitative decision areas of operations management. Four published applications of AHP are briefly reviewed in forecasting, supplier selection, facility location, and choice of technology. Furthermore, four more potential applications are suggested in other areas of operations management, including product design, plant layout, maintenance frequency selection, and choice of logistic carrier. In addition, suggestions for other areas of research are discussed.

An integrated JIT inventory model

Derives an integrated inventory replenishment model for a buyer that buys a single product from a vendor that manufactures this item and delivers it to the former in fixed quantities. It is assumed that both parties co‐operate and exchange information, including cost data, which is not unheard of in a JIT based partnering relationship, in deriving a jointly optimal inventory replenishment policy, rather than individually deriving their own independent policies. Such an approach can result in significant savings in the joint total relevant cost incurred by both parties. These savings may be shared in some fair and equitable manner, so that, from an economic standpoint, both the buyer and the vendor derive substantive benefits from such an integrated, jointly optimal policy. Illustrates the model and the related concepts through a simple numerical example.

Coordinated vs. independent inventory replenishment policies for a vendor and multiple buyers

Abstract Through a series of simulation experiments we show that classical lot sizing models do not adequately describe a situation where a single vendor produces and supplies a product to multiple industrial customers, buying in discrete lots. We suggest a common replenishment cycle based, coordinated inventory control model and show that this approach is superior to independent optimization.

A simulation study of lateral shipments in single supplier, multiple buyers supply chain networks

Abstract This study examines the effects, in terms of some selected criteria, of two lateral (intra-echelon) transshipment approaches in a two-echelon supply chain network, with a single supply source at the higher echelon and multiple retail locations at the lower, through a series of simulation experiments under different operating conditions. An important finding is that either of the proposed lateral shipment approaches are considerably superior to a policy of no such shipments, albeit at the expense of increased transportation activity. Further, an ad hoc emergency transshipment approach appears to be significantly more effective in terms of several important criteria, as compared to a more systematic transshipment technique based on stock level equalization.

A coordinated order-up-to inventory control policy for a single supplier and multiple buyers using electronic data interchange

Abstract One way to reduce inventory related costs is to shorten the time lag in communication and shipment. Electronic data interchange (EDI) is a potential tool that can help achieve this. We develop an analytical model based on a common cycle time approach, for inventory control under stochastic conditions for a vendor and multiple buyers dealing with a single product. The coordination implied by such an approach is facilitated by EDI. We present an iterative algorithm for calculating the operating parameters. We show that implementation of this model can be economically desirable to all parties involved.

Controlled partial shipments in two-echelon supply chain networks: a simulation study

Abstract In an uncoordinated supply chain network involving industrial buyers, the demand for an item on the vendor is often considerably lumpy, due to the independently derived buyer ordering policies. Thus, the latters ability to make on-time deliveries becomes a critical issue, particularly near the end of its stock cycle or when several orders from different buyers arrive within a short interval of time. This paper suggests the notion of controlled partial-order shipments as a means of alleviating the ill effects of such sporadic demand patterns. Two simple techniques for formulating partial shipment policies are suggested in this study. The effectiveness of this notion is tested through a series of simulation experiments and it is shown that partial shipments can be a desirable way for improving eventual customer service at the retail level of a supply chain system.

Production and delivery policies for enhanced supply chain partnerships

Recent research on supply chain management has highlighted the importance of building strong customer–supplier relationships in order to gain competitive advantage. This paper examines the benefits of buyer–supplier partnerships over lot-for-lot, i.e. single setup single delivery (SSSD) systems and suggests two policies that the supplier can pursue in order to meet customers’ needs: (1) Single setup multiple delivery (SSMD), and (2) Multiple setup multiple delivery (MSMD). If its fixed setup cost is relatively high, the supplier would prefer to implement SSMD and produce an entire order with one setup. However, if the supplier can reduce the setup cost and the suppliers capacity is greater than the threshold level (P = 2D), it is more beneficial for the supplier to implement the multiple setups and multiple deliveries (MSMD) policy, even though he pays more frequent setup costs since the savings in inventory holding costs is greater than the increased setup costs. In the latter case, setup reduction is realized by the knowledge and efficiency gained through frequent setup operations. To provide guidelines for the policy selection, we examine the interactions among variables, such as production capacity, learning rate, and holding costs for both parties. The paper also discusses the benefit sharing plan, which discusses according to the contribution (or sacrifice) each party made to the partnership efforts.

An inventory model with partial backordering and unit backorder cost linearly increasing with the waiting time

As the implementation of JIT practice becomes increasingly popular, each echelon in a supply chain tends to carry fewer inventories, and thus the whole supply chain is made more vulnerable to lost sales and/or backorders. The purpose of this paper is to recast the inventory model to be more relevant to current situations, where the penalty cost for a shortage occurrence at a downstream stage in a supply chain is continually transmitted to the upstream stages. The supplier, in this case, at the upstream of the supply chain is responsible for all the downstream shortages due to the chain reaction of its backlog. The current paper proposes a model in which the backorder cost per unit time is a linearly increasing function of shortage time, and it claims that the optimal policy for the supplier is setting the optimal shortage time per inventory cycle to minimize its total relevant cost in a JIT environment.

Production lot sizing with variable production rate and explicit idle capacity cost

Abstract This paper develops a model for simultaneously determining the optimal run length and the rate of production for a single item. As opposed to traditional approaches, the items output rate is treated as a decision variable. It is assumed that the production cost per unit is a quadratic function of the production rate, in an effort to capture the effect of increased unit cost as a result of deviating from the “nominal” rate of output, for which the system was designed. In addition a linear function is incorporated in the proposed model to represent the desirability or undesirability, as the case may be, of unused capacity. The iterative solution procedure developed is illustrated through a numerical example and extensive sensitivity analysis is performed for examining the major tradeoffs involved.

Equipment utilization based maintenance task scheduling in a job shop

Abstract This study examines, through a series of simulation experiments, the performance of a dynamic job shop, where the equipment is subject to failure. A number of decision rules are developed and tested based on individual machine utilization, for the purpose of scheduling the maintenance activities, in terms of a number of selected performance criteria, under different operating conditions. In addition to maintenance sequencing, the issues of, first the level of preventive maintenance activity and, secondly, the size of the maintenance workforce are examined concurrently. The results of the simulation experiments are analyzed and an attempt is made in arriving at some general conclusions concerning the relative effectiveness of the various types of decision rules under consideration.