Jukka Korpela

An analytic approach to production capacity allocation and supply chain design

Abstract The aim of this paper is to propose a framework by which the risks related to a customer–supplier relationship, the service requirements by the customers and the strategies of the supplier company can be included in production capacity allocation and supply chain design. Essentially, the target is to prepare a sales plan where the limited production capacity is allocated to the customers based on their strategic importance and the risk involved. Furthermore, the supply chain is designed on the basis of the customers’ strategic importance and service requirements. The framework is demonstrated with a numerical example and it is based on integrating the analytic hierarchy process (AHP) and mixed integer programming (MIP).

Benchmarking logistics performance with an application of the analytic hierarchy process

In the increasingly turbulent environment, logistics strategic management has become a necessity for achieving competitive advantage. The use of benchmarking is widening as a technique for supporting logistics strategic management. Benchmarking can be described as the search for the best practices leading to a superior performance of a company. In this paper, we demonstrate how the analytic hierarchy process (AHP) can be used for supporting a generic logistics benchmarking process. First, the customers of a company are interviewed in order to define the logistic critical success factors and to determine their importance. The performance levels of the companies to be benchmarked are then evaluated with regard to each success factor. Second, the factors enabling the companies to achieve superior logistics performance are determined and prioritized with respect to each success factor. Third, the strengths, weaknesses, and problems of the company conducting the benchmarking process are analyzed and prioritized with respect to each enabler. Then the potential developmental actions for achieving superior logistics performance are defined and prioritized. In addition to supporting the three steps mentioned above, the AHP-based approach forms the basic framework for a continuous logistics benchmarking process.

An analytic approach to supply chain development

Abstract Supply chain management (SCM) has emerged as an increasingly important approach to improving the performance of logistics systems. SCM is an integrated approach to increase the effectiveness of the logistics chain by improving cooperation between the players in the chain. The objective of this paper is to demonstrate the potential of the analytic hierarchy process (AHP) in supply chain development. The PROPER approach developed by Hannus for business process re-engineering is used as the basic framework, and the potential of the AHP especially in supporting the analysis phase of the supply chain development process is shown with illustrative examples.

Customer service based design of the supply chain

Abstract The purpose of this study is to propose a framework by which service elements and a companys own strategies can be included in the “traditional”, cost-based design of the supply chain. The framework is demonstrated with a numerical example and it is based on integrating the analytic hierarchy process (AHP) and mixed integer programming (MIP). The target is to optimise a companys supply chain based on customer service requirements within the constraints of the supply chain.

A customer oriented approach to warehouse network evaluation and design

Cost or profit based optimisation with capacity restrictions is the most widely used method for distribution network design. This approach is based on production or company oriented logistics thinking. However, in the present competitive business environment, a more customer driven and holistic approach to supply chain management is required. In this paper, the focus is on warehouse network evaluation and design. The aim is to present a customer oriented approach to the evaluation and selection of alternative warehouse operators. The Analytic Hierarchy Process (AHP) is used for analysing the customer-specific requirements for logistics service and for evaluating the alternative warehouse operators. The AHP-based analysis results in a customer-specific priority for each alternative warehouse operator. This priority describes how well a certain warehouse operator is expected to satisfy a certain customers performance requirements. The priorities are then entered to a Mixed Integer Linear Programming (MILP) -model which is used for maximising the overall service performance of the warehouse network under relevant restrictions. Thus, the warehouse network can be designed based on multiple quantitative and qualitative criteria instead of just costs or profits alone.

A decision aid in warehouse site selection

Abstract The strategic importance of logistics is steadily increasing and companies need effective logistics support to achieve competitive advantage. Warehousing strategy is an essential element of the overall distribution logistics strategy and especially the decision of selecting optimal sites for warehouses has significant effects on customer service and logistic costs. The warehouse site selection is a complex process where multiple, both tangible and intangible, criteria need to be considered. However, many of the present methods supporting the process remain cost-oriented. In the paper, we present an integrated approach to the site selection process where both qualitative and quantitative aspects can be taken into account by using an analytic hierarchy process-based decision aid.

Inventory forecasting with a multiple criteria decision tool

Abstract The strategic role of logistics is increasingly being recognised, and inventory strategy is an essential element of logistics strategy. Demand forecasting is one of the most crucial issues of inventory management as forecasts form the basis for the planning of production, transportation and inventory levels. The traditional methods used for forecasting include time series methods and causal methods. In the paper, we present an Analytic Hierarchy Process-based approach to demand forecasting. The proposed decision support system offers many improvements compared to traditional methods, such as the possibility to include both tangible and intangible factors in the forecasting process, and the ability to make predictions about the future development of the environmental factors.

An Integrated Approach for Truck Carrier Selection

ABSTRACT Transportation is one of the most important logistics activities with significant impacts on both customer service and economical result of the company. The importance of truck carrier selection as an element of transportation strategy has increased recently as more and more companies are organising transportation operations by using third party service providers. The present methods for the selection process include, for example, judgement, cost trade-off and distribution models. The presented framework for truck carrier selection is based on integrating the Analytical Hierarchy Process (AHP) and Mixed Integer Linear Programming (MIP).

Group decision support for analysing logistics development projects

Defining action plans is an important part of logistics strategic management. The selection of logistics development projects to be included in the action plans is usually a group effort, and a well-known decision methodology, the analytic hierarchy process (AHP), is an effective tool for group decision making. We propose the following AHP-based approach to analysing potential development projects to be included in a logistics action plan: (1) identify the potential projects, (2) analyse the contribution of each project to the achievement of the corporate and logistics long-term objectives using AHP, (3) analyse the prospects of successful implementation of each project using the AHP, and (4) select the projects to be included in the logistics development plan based on the contribution, the implementation prospects and the project cost using mixed integer programming. The approach is demonstrated with an illustrative numerical example.

AHP-based expert analysis of forest industry strategies

This study evaluates different strategic courses of action concerning the whole forest industry sector. The assessments are based on the opinions of a group of experts in Finnish forest industries. The aim of the study is to evaluate the factors of success and their relative weights, and to evaluate the formulated strategy alternatives of the forest industries for the future (the year 2010 and beyond). The decision support method Analytic Hierarchy Process (AHP) has been utilised in the assessment of different strategies. With AHP, it is possible to evaluate several strategies and to synthesise qualitative and quantitative factors in the decision making.