Panagiotis Kouvelis

Algorithms for robust single and multiple period layout planning for manufacturing systems

Abstract In many layout design situations, the use of ‘optimality’ with respect to a design objective, such as the minimization of the material handling cost, is insufficiently discriminating. Robustness of the layout, in cases of demand uncertainty, is more important for the manufacturing manager. A robust layout is one that is close to the optimal solution for a wide variety of demand scenarios even though it may not be optimal under any specific demand scenario. In this paper, we develop algorithms to generate robust layout designs for manufacturing systems. Our robustness approach to the layout decision making can be applied to single and multiple period problems in the presence of considerable uncertainty, both in terms of products to be produced as well as their production volumes. Our algorithms, executed in a heuristic fashion, can be effectively used for layout design of large size manufacturing systems.

On the Integration of Production and Financial Hedging Decisions in Global Markets

We study the integrated operational and financial hedging decisions faced by a global firm who sells to both home and foreign markets. Production occurs either at a single facility located in one of the markets or at two facilities, one in each market. The company has to invest in capacity before the selling season starts when the demand in both markets and the currency exchange rate are uncertain. The currency exchange rate risk can be hedged by delaying allocation of the capacity to specific markets until both the currency and demand uncertainties are resolved and/or by buying financial option contracts on the currency exchange rate when capacity commitment is made. A mean-variance utility function is used to model the firms risk aversion in decision making. We derive the joint optimal capacity and financial option decision, and analyze the impact of the delayed allocation option and the financial options on capacity commitment and the firms performance. We show that the firms financial hedging strategy ties closely to, and can have both quantitative and qualitative impact on, the firms operational strategy. The use, or lack of use of financial hedges, can go beyond affecting the magnitude of capacity levels by altering global supply chain structural choices, such as the desired location and number of production facilities to be employed to meet global demand.

The Effects of Trailer Scheduling on the Layout of Freight Terminals

Supervisors in a less-than-truckload freight terminal establish material flows inside the terminal by assigning incoming trailers to open doors. A common scheduling strategy is to look ahead into the queue of incoming trailers and assign them to doors to minimize worker travel. We develop a model of the resulting material flows and use it to construct layouts that exploit this type of scheduling policy. Based on data from a test site, our results suggest that look-ahead scheduling alone can reduce labor costs due to travel by 15-20% compared to a first-come-first served policy. Layouts constructed with the material flow model provide further savings of 3-30% in labor cost due to travel, depending on the mix of freight on incoming trailers and the length of the queue of trailers from which the supervisor makes assignments.

A robustness approach to uncapacitated network design problems

Abstract In this paper, we address uncapacitated network design problems characterised by uncertainty in the input data. Network design choices have a determinant impact on the effectiveness of the system. Design decisions are frequently made with a great degree of uncertainty about the conditions under which the system will be required to operate. Instead of finding optimal designs for a given future scenario, designers often search for network configurations that are “good” for a variety of likely future scenarios. This approach is referred to as the “robustness” approach to system design. We present a formal definition of “robustness” for the uncapacitated network design problem, and develop algorithms aimed at finding robust network designs. These algorithms are adaptations of the Benders decomposition methodology that are tailored so they can efficiently identify robust network designs. We tested the proposed algorithms on a set of randomly generated problems. Our computational experiments showed two important properties. First, robust solutions are abundant in uncapacitated network design problems, and second, the proposed algorithms performance is satisfactory in terms of cost and number of robust network designs obtained.

A robustness approach to international sourcing

An important advantage of the use of international sourcing networks (i.e. selection of suppliers in various countries to support the demands of the firms international factory network) is the resulting hedging power against real exchange rate changes in the international environment. Due to the uncertainty of future real exchange rate changes, the international manager wants to develop a sourcing network that is relatively insensitive (i.e. robust) to the potential changes of the macroeconomic parameters over a planning horizon. In our paper, we formally develop arobust approach to international sourcing. This approach develops the international supplier network in a way that adequately hedges the firms performance against the worst contingency in terms of realizable real exchange rate shocks over a planning horizon. We present an algorithm to obtain theN best robust solutions (i.e. sourcing networks) to the international sourcing problem. Some computational results on the effectiveness of the approach are provided. We also demonstrate how the approach can be used to evaluate various sourcing strategies.

A simulated annealing procedure for single row layout problems in flexible manufacturing systems

In this paper we address a layout problem in flexible manufacturing systems (FMSs). A layout type that has been extensively implemented in FMSs is the single row machine layout. In such a configuration machines are arranged along a straight track with a material handling device moving jobs from one machine to another. The single row layout problem (SRLP) deals with the optimal arrangement of the machines for the above configuration. We propose a simulated annealing (SA) heuristic for the solution of SRLP. Extensive computational results, and ways to improve the performance of the SA algorithm through parameter fine-tuning procedures, are reported.

An improved tabu search heuristic for solving facility layout design problems

The design of the facility layout of a manufacturing system, usually formulated and solved as a quadratic assignment problem (QAP), is of tremendous importance for its effective utilization. In this paper we discuss a new implementation of the tabu search metaheuristic to solve the QAP. Our tabu search implementation includes recency-based and long term memory structure, dynamic tabu list size strategies, and intensification and diversification strategies. The tabu search algorithm converges with a reasonable speed from any random initial solution to very good layouts. Our extensive computational experiments, including statistical analysis and library analysis, strongly support the superiority of our tabu search implementation (we refer to it as (CK)) over existing algorithms in the literature.

Unidirectional loop network layout problem in automated manufacturing systems

In this paper, we address the design of unidirectional loop network layouts for automated manufacturing environments. We show that the problem is NP-complete. Using a workstation interchange argument, we develop dominance relationships for easy identification of local optimal solutions. Our results suggest the need for simple heuristics to solve the problem. We identify cases in which the heuristics perform optimally, and we analyze the worst case behavior of the heuristics. We develop an optimal branch-and-bound procedure that is computationally efficient for medium-sized problems. We also present a decomposition principle helpful for dealing with large workflow matrices. We report computational results on the heuristics and the branch-and-bound procedure. We show that one of the heuristics performs impressively well in terms of solution quality and computational time requirements.

Design strategy and its interface with manufacturing and marketing: A conceptual framework

Abstract “Product design is a strategic activity, by intention or by default” (Whitney (1988)). An organization has to compete to ensure its survival and the dimensions of competition are cost, quality, reliability, flexibility, service, and speed of delivery. Major commitments to these dimensions are usually made during the design stage of the product. Unfortunately, we observe in most organizations a widening gap between design and other business functions (Meikle (1989)). This article attempts to bridge this gap by: (1) defining “design” as a strategic activity to facilitate its participation in the corporate debate, and; (2) presenting a conceptual framework which integrates design with manufacturing and marketing as equal partners to support the overall corporate mission. In this article we examine the strategic nature of design. We define “design” and “design strategy” in a language that is familiar to business and present a conceptual framework that can be used to plan, implement, and control design activities strategically. According to this framework all dimensions of competition can be expressed by two basic design variables, complexity and innovation. The design strategy formulation process consists of two stages. In stage one we position a design using complexity and innovation levels to identify threats and opportunities, to evaluate consistency of design strategies, and to obtain an aggregate measure of effort required to support a design strategy. In stage two we use the strategic insight gained in stage one to select an appropriate infrastructure to support our design objectives. The framework presented in this article extends the manufacturing strategy framework by Hill (1989) to provide an effective interface between design, manufacturing, and marketing functions. We have used the dimensions of competition as the integrating force. This article also provides a foundation on which future empirical and analytical research can be based. It emphasizes the need for strategic management of design activity instead of relegating design to a traditional reactive role. In this respect the framework is a significant step towards reducing the existing gap between design and the other business functions, and can help corporate strategists use design as a competitive weapon.

Expected travel time and optimal boundary formulas for a two-class-based automated storage/retrieval system

Our paper studies a two-class-based rectangular-in-time automated storage/ retrieval system (AS/RS). We present explicit formulas for the optima! boundary of the two storage areas as well as for the expected single command cycle time for an optimally designed rack. In the basic model each crane handles a single aisle. These formulas provide the designer with a full picture of the quantitative effects of the various factors (i.e., access frequencies of the two storage areas, and dimensions of the rack) on the optimal boundary of the two storage areas and the achievable cycle lime in the warehouse. We also develop expected travel time formulas for the dual command AS/RS with two-class-based storage policies and obtain the optimal boundary with a one-dimensional search procedure. Similar developments (i.e., expected travel time formulas and optimal boundary search procedures) are discussed for AS/RS with a single command policy but with each crane handling multiple aisles.