Moosa Sharafali

Adding value through outsourcing: Contribution of 3PL services to customer performance

– The aim of this research is to understand how customers perceive their logistics service providers in terms of achieving the claimed benefits of outsourcing. This paper is based on research focusing on the state of the 3PL (Third Party Logistics) industry in Australia., – A set of typical business outcomes to which logistics outsourcing is expected to contribute were identified. Customers were asked to rate the contribution of their principal 3PL to these performance indicators. We used competitive priorities of 3PLs, the services provided by them and technologies used by them as predictors and performed regression analysis for each of these., – The results indicate that customers of 3PLs place significant value on the services they provide, technologies they use and objectives that transcend just low cost. The implication of this final finding shows that customers see a focus on service based solutions as providing a set of benefits beyond mere cost control., – The main limitation of this paper is that it is confined to Australia. So, any extensions of the findings to other regions of the world should be done with caution., – The practical implication of the study is that it provides support for the potential for an effective set of arrangements with 3PLs to help organizations to move out of the world of pure cost based competition, and into one where they could compete on multiple dimensions., – This study provides evidence from customers of logistics service providers indicating that 3PLs provide them with a means for competing through greater flexibility, at the same time as enabling better‐cost management. In this sense, customers see 3PLs as providing them with a potential pathway to more innovative business models.

Some models for understanding the cooperation between the supplier and the buyer

This paper presents some stochastic models of cooperation between the supplier and the buyer. We first recall some of the results that pertain to the case where the buyer and the supplier formulate their inventory policies independently and sequentially. Next, we analyse the case where the buyer and the supplier jointly determine the optimal order quantities. Our analysis shows that only the supplier benefits from such cooperation. In order to motivate the buyer to cooperate, we consider some cooperative strategies. These include the analysis of the impact of (1) price changes, (2) discount policies and (3) partial deliveries. The importance of coordination is brought out from the analysis.

Dynamic Allocation of Airline Check-In Counters: A Queueing Optimization Approach

This paper was motivated by an observation in an international airport with regard to allocation of resources for check-in counters. In an exclusive check-in counter system, each flight has a dedicated number of counters that will be open until at least a half-hour before the scheduled departure of that flight. Currently, in many of the airports around the world, the decision to open or close check-in counters is done on an ad hoc basis by human schedulers. In doing so, the schedulers are almost always forced to perform a balancing act in meeting the quality of service stipulated by the airport authority vis-a-vis the optimal allocation of the resources to the counters. There appear to be very few academic and application papers in counter management, and most of those that have looked into this problem have resorted to simulation to study the queue characteristics. Ours is the first paper to show that for a specific flight, this complicated problem is amenable to analytical treatment. We first propose a multicounter queueing model with a special type of arrival process reflecting reality from the population of passengers booked for the flight. Most importantly, we derive the time-dependent operating characteristics to the queueing process under a specified time-window constraint. Then a stochastic dynamic programming model is formulated to determine the optimal numbers of counters to open over the time window specified. A numerical example is provided to illustrate the model solution and gain managerial insights.

Production Scheduling in a Flexible Manufacturing System under Random Demand

Abstract This paper considers the problem of production scheduling in a Flexible Manufacturing System (FMS) with stochastic demand. With FMS, there is inherent flexibility made available to production. However, it is not always that the entire mix of parts can be processed simultaneously. As such, grouping of the part types is needed. The problem complexity increases when both demand and processing times are random. In this paper, we model the problem as a polling model with the objective of minimizing the total average cost. First, we consider a special cost rate problem whereby the holding cost is assumed proportional to the processing time and inversely proportional to the FMS load factor. Here, three situations are compared: (i) no mixing is allowed among part-families; (ii) a particular part-family, with an independent production schedule, can also be produced with other families; and (iii) a particular part-family with no independent production schedule but can be mixed with all the other families. Under certain conditions of the mixing proportions, we derive conditions for one situation to dominate the others. Next, an optimization model is considered which determines the optimal mixing proportions, if the decision to mix the part-family with other part-families is taken. Specifically, we find that any family with no independent production schedule should always be mixed with the part-family that offers the highest load to the FMS. Finally, we show how the general holding cost rate problem can be analysed using approximate results found in the polling literature.

On the staffing policy and technology investment in a specialty hospital offering telemedicine

We study a specialty hospital providing traditional face-to-face consultations by experts and telemedicine services by tele-specialists. As accuracy of diagnosis and treatment by tele-specialists are paramount in such a setting (unlike call center management), our main focus is to determine the optimal investment level in telemedicine technology with the trade off being between accuracy/quality and cost. Using a heuristic proposed in queuing theory, we provide the optimal investment in telemedicine technology together with the staffing policy, considering the various cost components, including staffing, technology investment, incorrect treatment, and waiting. The model also incorporates buy-in by the patients in the form of the arrival (show-up) rate dependent on the technology level established. We find that under certain conditions the hospital should not invest in telemedicine. Finally, we provide the optimal tele-specialist policy of the ratio of patients to treat via telemedicine and to refer to the face-to-face consultation. Our model also suggests that a policy of treating all patients via telemedicine is never optimal.

A differentiated service scheme to optimize website revenues

We consider a website host server with web quality of service (QoS) capabilities to offer differentiated services. A quantitative modelling framework is set up to analyse the economic benefits of differentiated services and to build optimization models for managing the website hosts connection bandwidth to the Internet (which is assumed to be the bottleneck factor determining the QoS). Three models are formulated corresponding to three operational scenarios to provide differentiated services. The first is for the marketing manager to classify visit requests as premium or basic when the information technology (IT) manager has already reserved bandwidths for the two classes, and the second is for the IT manager to allocate the total available bandwidth to each class when the marketing manager has already designated which visit requests are premium and which are basic. The third is for the joint optimization of request classification and bandwidth allocation when centralized coordination is possible. Analytic results are obtained for a special case that corresponds to very impatient customers requesting large amounts of data. Qualitative insights gained and numerical results obtained strongly support the implementation of differentiated services. More interestingly, the decentralized models that use simple and rough-cut rules yield solutions almost as good as the joint optimization model.

A note on evaluating the risk in continuous review inventory systems

This paper is an attempt to evaluate the long term risk of stock-out and obsolescence in continuous review inventory systems, typically of slow-moving but very critical items. Inventory decisions depend very much on the goodness of the estimates of the input parameters like the holding, ordering and stock-out costs. It is a well-known fact that stock-out cost is a very difficult parameter to estimate. The lower it is the lower the quality of service will be while the higher it is the higher the inventory cost would be and possibly higher obsolescence rate too. In this paper, we develop a framework to evaluate the risks, in the long term, of stock-out and obsolescence, especially for inventory of critical spares whose demand rate is not high. For this purpose, we propose the use of quasi-stationary distributions for continuous review (r, Q) inventory systems with the condition that the Laplace transforms of functions of interest are rational algebraic functions. We relate the quasi-stationary distribution to the conditional tail expectation which is a coherent risk measure used in finance and actuarial studies. Numerical illustration is also provided.

Staggering Periodic Replenishment in Multivendor JIT Environments

The delivery scheduling problem studied in this paper was motivated by the operation in a large personal computer assembly plant, which was using multisourcing for some of its materials. The companys objective was to design a delivery schedule so that the average inventory level in the factory was minimized. We show that the problem is intimately related to a classical inventory staggering problem, where the focus is on the computation of the peak inventory level associated with the replenishment policy. This connection allows us to show that the delivery scheduling problem is NP-hard. For the two-vendor case with integral replenishment intervals, we propose a generalized form of Homers scheduling heuristic and obtain performance bounds for the classical inventory staggering problem. Our analysis uses the Chinese remainder theorem in an interesting way. The approach can be generalized to the case with more than two vendors, leading to a strong linear-programming-based lower bound for the inventory staggering problem. We illustrate this technique for the case in which all the replenishment intervals are relatively prime, establishing a bound that is not greater than 140% of the optimal. We examine the implications of these results to the delivery scheduling problem.

Event-based allocation of airline check-in counters: A simple dynamic optimization method supported by empirical data

This paper studies the real-life problem of dynamically optimizing the number of airport check-in counters to allocate for a single flight. The main feature of our work is the use of empirical data collected at the Singapore Changi Airport, which drives the dynamic optimization model of a parallel queues system. We propose an event-based dynamic programming model that simplifies considerably the optimization analysis even for large-scale problems with 700+ booked passengers. We investigate the following research questions: (a) For a particular flight, what is the optimal number of counters the system should open with and what is the corresponding optimal total cost? (b) Given the state of the system at any event epoch, should we open another counter or not and what is the optimal cost-to-go from this state? The empirical data we collected at the airport are used to test the assumptions, estimate the key parameters, and run the computational experiments. We apply our model to 14 flights at the Singapore Changi Airport and identify cases in which, depending on the cost parameters, the model advocates the use of either a dynamic or a static policy. Although the model concerns only an exclusive-use system, it is flexible enough to apply to other configurations such as a common-use system or a single-queue, multicounter system.

Optimal parking of idle elevators under myopic and state-dependent policies

In this paper we discuss the problem of optimally parking single and multiple idle elevators under light-traffic conditions. The problem is analyzed from the point of view of the elevator owner whose objective is to minimize the expected total cost of parking and dispatching the elevator (which includes the cost incurred for waiting passengers). We first consider the case of a single elevator and analyze a (commonly used but suboptimal) state-independent myopic policy that always positions the idle elevator at the same floor. Building on the results obtained for the myopic policy, we then show that the optimal non-myopic (state-dependent) policy calls for dispatching the idle elevator to the state-dependent median of a weight distribution. Next, we consider the more difficult case of two elevators and develop an expression for the expected dispatching distance function. We show that the objective function for the myopic policy is non-convex. The non-myopic policy is found to be dependent on the state of the two idle elevators. We compute the optimal state-dependent policy for two elevators using the results developed for the myopic policy. Next, we examine the case of multiple elevators and provide a general recursive formula to find the expected dispatching distance functions. Finally, we generalize the previous models by incorporating a fixed cost for parking the idle elevators that results in a two-sided optimal policy with different regions. Every policy that we introduce and analyze is illustrated by an example. The paper concludes with a short summary and suggestions for future research.