Srinagesh Gavirneni

Value of Information in Capacitated Supply Chains

We incorporate information flow between a supplier and a retailer in a two-echelon model that captures the capacitated setting of a typical supply chain. We consider three situations: (1) a traditional model where there is no information to the supplier prior to a demand to him except for past data; (2) the supplier knows the (s, S) policy used by the retailer as well as the end-item demand distribution; and (3) the supplier has full information about the state of the retailer. Order up-to policies continue to be optimal for models with information flow for the finite horizon, the infinite horizon discounted and the infinite horizon average cost cases. Study of these three models enables us to understand the relationships between capacity, inventory, and information at the supplier level, as well as how they are affected by the retailers (S - s) values and end-item demand distribution. We estimate the savings at the supplier due to information flow and study when information is most beneficial.

Information Flows in Capacitated Supply Chains with Fixed Ordering Costs

Many organizations have only recently recognized that sharing information with other members in their supply chain can lead to signficant reduction in the total costs.Usually these information flows are incorporated into existing operating policies at the various parties.In this paper we argue that, in some cases, it may be necessary to change the way the supply chain is managed to make complete use of the information flows. We support this argument by analyzing a supply chain containing a capacitated supplier and a retailer facing i.i.d. demands. In addition there are fixed ordering costs between the retailer and the supplier.In this setting, we consider two models: 1 the retailer is using the optimal s,S policy and providing the supplier information about her inventory levels; and 2 the retailer, still sharing information on her inventory levels, orders in a period only if by the previous period the cumulative end-customer demand since she last ordered was greater than δ. Thus, in Model 1, information sharing is used to supplement existing policies; while, in Model 2, we have redefined operating policies to make better use of the information flows. We will show, via a detailed computational study, that the total supply chain costs of Model 2 are 10.4% lower, on the average, than that of Model 1. We noticed that this reduction in costs is higher at higher capacities, higher supplier penalty costs, lower retailer penalty costs, moderate values of set-up cost, and at lower end-customer demand variances.

Benefits of co-operation in a production distribution environment

Abstract We model co-operation in a typical production distribution setting that contains one capacitated supplier producing and distributing a single product to many identical retailers who are facing i.i.d. end-item demands from the consumers. We consider three inventory allocation mechanisms, representing varying degrees of co-operation, at the supplier: (1) the orders from the retailers are filled in a predetermined sequence; (2) the orders from the retailers are filled after taking into account their current inventories; and (3) the orders from the retailers are filled assuming that the product can also be shipped from one retailer to another. We estimate the benefits due to co-operation in this supply chain and study the effect of various system parameters on these benefits. An extensive computational study indicated that the benefits of co-operation in this production distribution environment decrease with increase in the supplier capacity, increase in the number of retailers, decrease in penalty cost, and decrease in consumer demand variance.

Measuring police efficiency in India: an application of data envelopment analysis

Purpose – The purpose of this research is to develop a method for measuring police efficiency.Design/methodology/approach – The design of this paper is to apply the technique of Data Envelopment Analysis (DEA), a comparative or relative efficiency measuring mechanism to police‐work‐related data from India. This application provides a rationale for identifying good performance practices. It helps in generating targets of performance, the optimum levels of operations, role models that inefficient departments can emulate and the extent to which improvements can be made over a period of time.Findings – The paper measures the performances of State police units in India and the results suggest ways in which some State police departments can improve their overall efficiency.Practical implications – The paper suggests ways in which the efficiency of any unit of criminal justice systems may be formulated and compared across different units of the system.Originality/value – The value is that it introduces a new tec...

Periodic review inventory control with fluctuating purchasing costs

For an inventory control problem in which the purchasing cost changes (e.g. exchange rate fluctuations), we show that an order up to policy is optimal and determine conditions under which the optimal up to levels are monotonically ordered. We also propose a simple method for predicting the effectiveness of myopic heuristics.

Price fluctuations, information sharing, and supply chain performance

Abstract We consider a supply chain consisting of one supplier with finite production capacity and a retailer facing independent and identically distributed demands from end-customers. Existing research advocates that, in a decentralized setting, the retailer and the supplier using stationary order up to policies is efficient. We show that in the presence of information sharing, the supply chain performance can be improved by the supplier offering fluctuating prices. We study two specific settings: (1) the supplier only knows the parameters of the retailer’s inventory policy; and (2) the supplier knows the day-to-day inventory levels at the retailer as well. After establishing structure of optimal policies and developing efficient solution procedures, we perform an extensive computational study to determine the extent of the improvements realizable in the supply chain. We observed that for setting 1, an improvement was realized only when the end-customer demands were highly variable. Even then, the improvement in supply chain performance was less than 1%. Whereas, for setting 2, the improvement in supply chain performance averaged around 5.0% with a maximum of 16.3%.

Anchor Selection and Group Dynamics in Newsvendor Decisions---A Note

We conducted a newsvendor experiment in which (i) the subjects were presented with multiple pieces of information that they could possibly use to anchor their decision and (ii) the subjects participated either as individuals or in groups of three. The primary objective was to determine whether the subjects tended to consistently anchor to the mean or change their anchor based on the experimental setting. The secondary objective was to study the impact of group dynamics on their decision-making approach. We observed that the subjects did not anchor to any one particular value, but rather chose an anchor that was closer to the optimal value. In addition, we observed that although there was no difference in their relative tendencies to anchor, the subjects in groups demonstrated a lower propensity for error than their individual counterparts.

Periodic flexibility, information sharing, and supply chain performance

A two-stage serial supply chain in which a retailer and his supplier are operating in make-to-stock environments and the retailer faces uncertain demands from the end-customers is studied. When this supply chain is centrally managed, the optimal policy is an extension of the Clark–Scarf echelon base stock policy. Since these supply chains are usually operated in a decentralized manner, an operational change is proposed that reduces the inefficiency associated with decentralization. The policy, which is called Periodic Flexibility (PF), provides the retailer with structural flexibility to order any amount in one period of a cycle, while requiring that the retailer receives a fixed-quantity shipment in the other periods. Optimal policies and their associated costs for the non-stationary inventory control problems faced by the retailer and the supplier under PF are characterized. A detailed computational study shows that PF improves the supply chain performance by about 11% on average. This improvement is a 43% (on average) reduction in the efficiency gap between centralized and decentralized control. The improvement of PF is due to information sharing, i.e., the retailer passing her end-customer demand information to the supplier. The PF strategy is compared to the well-known quantity flexibility scheme and it is shown that the PF approach tends to be more efficient. [Supplementary materials are available for this article. Go to the publishers online edition of IIE Transactions for the following free supplemental resources: Additional proofs]

An efficient procedure for non-stationary inventory control

We present an efficient solution method – Direct Derivative Estimation (DDE) – for computing optimal order-up-to levels for a discrete time non-stationary inventory control model. We generalize a number of non-stationary inventory control models (which underlie larger models of supply chains) that include forecast updates, seasonality, information sharing, and exchange-rate fluctuations. This procedure is different from the existing ones in that it computes, in a recursive manner, the derivative of the cost function and not the cost function itself. It can also handle a much wider variety of fluctuations in the problem parameters. In our computational testing it was found to be considerably faster than Dynamic Programming and Infinitesimal Perturbation Analysis.

Value of Information Sharing and Comparison with Delayed Differentiation

The industrial supplier-customer relations have undergone radical changes in recent years as the philosophy behind managing manufacturing systems continues to be influenced by several Japanese manufacturing practices. As more organizations realize that successful in-house implementation of Just-In-Time alone will have limited effect, they are seeking other members of their supply chain to change their operations. This has resulted in a certain level of co-operation, mainly in the areas of supply contracts and information sharing, that was lacking before. This is especially true when dealing with customized products, and is most commonly seen between suppliers and their larger customers.