Multiplant MRP

Many manufacturing firms have multiple manufacturing plants, located in geographically diverse parts of the world. This situation is becoming more common, as firms establish new plants in foreign countries to take advantage of low labor cost. In such cases, it is not unusual for the firm to retain production capability of certain key parts in a backup plant, with the necessary equipment and trained workforce in place. High volume production could be obtained relatively quickly from the backup plant in case of an emergency at the main supplying plant. In such multiplant settings, the transportation costs are significant. Throughout this paper, we use the term “multisourced parts” to describe parts produced in more than one location.Material Requirements Planning (MRP) is the component of a total manufacturing control system that is designed to manage inventory and plan orders for parts and material with dependent demand (demand derived from the demand of other items). Most of the literature on MRP systems discusses MRP methodology in a single-plant environment. Most MRP software systems in use today are single-plant systems.Currently, it is common for firms with multiple plants treated as cost centers to use an independent single-plant MRP system for each and handle the transshipment problems manually. Because of lack of coordination of production schedules between supplying and demanding plants, those firms hold more inventory and experience longer lead times than necessary to compensate for uncertainties in schedules and supply policies.The purpose of this article is to enhance single-plant MRP systems for coping with multiplant situations in which: the plants are regarded as cost centers, there exist multisourced parts, and the transportation costs are significant. The multiplant MRP system should recognize that parts are produced in different plants, make offset calculations for in-transit lead times, and consider transportation costs when establishing production requirements and shipping routes for multisourced parts. The objective is, beginning with the corporate-determined master schedule for finished products, to communicate in one planning cycle time-phased planned order release schedules and shipping/delivery schedules to each manufacturing plant producing components for the finished products.We first present a simplified framework for the multiplant MRP system, where a transportation algorithm is incorporated into the MRP logic. Then we refine this simplified framework to handle more complex aspects of a multiplant network. These complexities include the treatment of requirements that are not shipped on time and the regeneration of new MRP schedules. We also observe that the solution to the transportation problem described above is affected by the lot-sizing rules employed. In addition, we discuss several important issues and decisions that confront a firm when implementing a multiplant MRP system.     

Internal and external suppliers in manufacturing networks—An empirical analysis

The purpose of the paper is to explore the way manufacturing firms use internal and external suppliers in the design and management of manufacturing networks. The main area of interest is to explore the similarities and differences between internal and external suppliers, with respect to their roles and the reasons for choosing a certain type of supplier. We base our analysis on data from 104 Swedish manufacturing plants and their corresponding manufacturing networks of internal and external suppliers. The results of the study show that there are significant differences between the criteria that are influential in choosing a certain type of supplier. The choice of an internal supplier is largely based on a single corporate decision, while an external supplier has to perform well on a number of criteria (primarily quality, cost, and delivery dependability). When comparing the selection criteria with competitive priorities and plant performance, we find that the criteria for selecting external suppliers has a better match than those for selecting internal suppliers. The sample contained plants having only external suppliers as well as plants having both internal and external suppliers, but the selection criteria for external suppliers are the same for both groups and not dependent upon the presence or absence of internal suppliers.     

A heuristic solution procedure for the multi-item,single-level,limited capacity,lot-sizing problem

The problem to be considered is that of determining lot-sizes for a group of products which are produced at a single workcentre. It is assumed that the requirements for each product are known, period by period, out to the end of some common time horizon. (A reasonable assumption in a Material Requirements Planning context when we are dealing with components of one or more other items already scheduled.) For each product there is a fixed setup cost incurred each time production takes place. Unit production and holding costs are linear. The time required to set up the machine is assumed to be negligible. All costs and production rates can vary from product to product but not with respect to time. In each period there is a finite amount of machine time available that can vary from period to period. The objective is to determine lot-sizes so that 1) costs are minimized, 2) no backlogging occurs and 3) capacity is not exceeded.An exact solution to this complex problem is out of the question. Therefore, a simple heuristic has been developed which guarantees a feasible solution, if one exists. Results of a large number of test problems, including three supplied by industrial sources, are presented. The results indicate that the heuristic will usually generate a very good solution with a relatively small amount of computational effort.     

Optimal procurement mechanisms for divisible goods with capacitated suppliers

Procurement auction literature typically assumes that the suppliers are uncapacitated [see, e.g. Dasgupta and Spulber in Inf Econ Policy 4:5–29, 1990 and Che in Rand J Econ 24(4):668–680, 1993]. Consequently, the auction mechanisms award the contract to a single supplier. We study mechanism design in a model where suppliers have limited production capacity, and both the marginal costs and the production capacities are private information. We provide a closed-form solution for the revenue maximizing direct mechanism when the distribution of the cost and production capacities satisfies a modified regularity condition [Myerson in Math Oper Res 6(1):58–73, 1981]. We also present a sealed low bid implementation of the optimal direct mechanism for the special case of identical suppliers. The results in this paper extend to other principle-agent mechanism design problems where the agents have a privately known upper bound on allocation. The authors would like to thank the anonymous referees for valuable suggestions and comments.     

Time-sensitive supply chain disruption recovery and resource sharing incentive strategy

Market demand is becoming increasingly time-sensitive in competitive environments. Hence, supply disruptions will have a more serious impact on the profits of supply chains. This study applies a Stackelberg competition between a single supplier and a single manufacturer in a time-sensitive supply chain in a cloud manufacturing environment. We aim to address the supplier’s production capacity recovery issues and the manufacturer’s incentive decision issues after supply disruption. We find that the supplier is in a weak position when the information is symmetrical. The manufacturer can encourage the supplier to shorten the recovery time by raising the unit wholesale price. When the supplier’s unit production cost remains unchanged but the unit wholesale price increases, the profit of the supplier first increases and then decreases. In addition, under the centralized decision-making setting, the optimal recovery time of the supplier is shorter and the optimal unit market price of the product is lower than that under decentralized decision-making. We further find that resource sharing can shorten the optimal recovery time, but it does not necessarily play an incentivizing role.     

基于分支冻结算法的供应商选择与订单分配

针对已有研究供应商选择与订单分配的特点,建立更加符合实际情况需求的供应商选择与订单分配混合整数规划模型,其优化目标为最小总成本.考虑到模型求解的复杂程度,设计一种分支冻结算法,并结合启发式算法的原则避免出现大量的非存在解.实验算例表明所建立的模型能够反映供应商选择与订单分配过程中的产品生产成本过大现象,其算法能够在允许...     

Tinbergen's Hierarchy Hypothesis Revisited

In this study, Tinbergen's hierarchy hypothesis is extended to include Dokmeci's optimization of the hierarchical production model. The optimal location of hierarchically coordinated plants is determined on a non-homogenous plane by taking into consideration price-elastic demand, production cost and transportation cost. The objective is to determine the maximum-profit location while satisfying the income constraint of the region. A stepwise heuristic approach is used for the solution. In the region, the markets are divided into optimum subsets according to a chosen number of plants in each level. Market demand is calculated with respect to a selected uniform price. The optimum location of plants is calculated iteratively by the use of Dökmeci's model in each level of the hierarchy. Then, the same procedure is repeated for different numbers of plants in each level of the hierarchy by taking into consideration the interdependence among the levels. The alternative which produces the maximum profits within the limits of regional income is determined as the best system.     

销售商成本信息不对称下的两阶段供应链协调

以往的文章研究了由单个供应商和单个销售商组成的供应链协调问题,给出了双方合作时的供应链协调模型,这些都是以信息共享为基础,但是现实中信息不对称使得供应链协调模型的有效性受到了冲击。为避免这种现象的发生,论文在双方合作的基础上建立了供应链双方在需求信息不对称情形下的协调模型。该模型在供应链双方协商分享供应链利润的条件下,运用激励机制使销售商诚实申报成本信息,在实现供应链利润最大化的同时使供应链成员实现双赢。     

Private and Social Incentives for Vertical Contract Disclosure

We follow the framework in Arya and Mittendorf's 2011 Rand Journal of Economics paper but extend their analysis by investigating supplier(s)' equilibrium choices of disclosure or confidentiality regarding their contract terms with the downstream retailers. In the case of a common supplier, we find that the unique subgame perfect Nash equilibrium (SPNE) is for the supplier to choose disclosure. This private incentive is opposite to social incentive, which calls for the regulator to choose confidentiality. In the case of dedicated suppliers, however, there are multiple SPNE due to coordination issues between the suppliers. The case which maximizes social surplus – disclosure – can be supported as a SPNE, together with the case of confidentiality, which maximizes supplier profits at the cost of everyone else. Copyright © 2014 John Wiley & Sons, Ltd.     

Vertical FDI versus outsourcing: The role of technology transfer costs

The effect of technology transfer cost on the choice between horizontal foreign direct investment (FDI) and licensing is well established. We explore this “make or buy” decision in the offshoring context when offshore input production involves costly technology transfer. The burden of technology transfer cost that falls on the sourcing firm depends not only on the technological complexity of the offshored input but also on the mode of organizing offshoring. Outsourcing entails low technology transmission cost but a higher distortion in input production by the arm's length supplier while vertical FDI involves a higher technology transmission cost but a lower distortion in input production by the affiliated supplier. Contrary to the existing literature, we find that, irrespective of the type of good, outsourcing is the preferred mode at higher ends of technological complexity.     

Optimal requirement allocation among quantity-discount quoting suppliers

We consider a problem motivated by a central purchasing organization for a major office products distributor. This purchasing organization must source a quantity of a particular resale item from a set of capacitated suppliers. In our case each supplier offers an incremental quantity discount purchase price structure. The purchaser’s objective is to obtain a quantity of a required item at minimum cost. The resulting problem is one of allocating order quantities among an approved supply base and involves minimizing the sum of separable piecewise linear concave cost functions. We develop a branch and bound algorithm that arrives at an optimal solution by generating linear knapsack subproblems with feasible solutions to the original problem. This research was partially supported by a 2007 Summer Research Grant awarded to Asoo J. Vakharia.     

A novel option contract integrated with supplier selection and inventory prepositioning for humanitarian relief supply chains

This paper proposes a novel two-period option contract integrated with supplier selection and inventory prepositioning. A two-stage scenario-based mixed possibilistic-stochastic programming model is developed to cope with various uncertainties. The first stage's decisions include supplier selection and capacity reservation level at each supplier/period and the level of inventory prepositioning. Furthermore, decisions regarding the time and exercised amount are made in the second stage. Applicability of the model is validated through a real case study. Finally, several sensitivity analyses are conducted to examine the effect of important parameters on the solutions to gain useful managerial insights.     

Contracting with Private Knowledge of Production Capacity

We analyze the design of procurement contracts when the supplier is privately informed about both his innate production capacity (K) and his innate unit cost of production. We identify conditions under which the supplier will strategically employ an inefficient production technology to expand output above K. We also show that when the buyer employs the simple fixed‐price cost‐reimbursement (FPCR) contracts in the setting examined by Rogerson (2003), the supplier has no incentive to exaggerate K. Furthermore, the buyer can secure with FPCR contracts at least 75% of the surplus she secures with fully optimal contracts.     

Supply chain integration and operational performance: The contingency effects of production systems

The boundary conditions of supply chain integration (SCI) have been widely studied in order to find out when SCI is applicable and effective. However, prior studies have mainly focused on external contextual factors, such as supply complexity, environmental uncertainty and country-level infrastructure. This study contributes to the SCI literature by examining the contingency effects of internal production systems on the relationship between supplier integration, customer integration and operational performance. Based on organizational information processing theory, we provide evidence to show that the impact of supplier and customer integration on operational performance varies across production systems, such as one-of-a-kind production, batch production and mass production systems. The empirical results also reveal how supplier and customer integration can be matched with different configurations of production systems in order to achieve the desired quality, flexibility, delivery or cost performance.     

4PL模式下基于时间资源调度的供应成本优化研究

订单时间是影响供应成本的主要因素,合理的进行时间资源调度更是供应成本优化的关键所在。现有的第四方物流(Fourth Party Logistics,4PL)路径优化研究只关注物流环节的时间和成本因素,没有与物流上一环节的整合。本文提出将4PL服务拓展到客户的生产环节,在供应商的生产时间窗约束下,构建模型得到生产时间与物流时间的最优组合方案使供应商供应成本最低。最后基于一个实例的分析,验证了该模型能有效帮助4PL为客户提供最优供应方案。     

Managing returnable transport items in a vendor managed inventory system

This paper addresses a closed-loop inventory routing problem with demand uncertainty, which manages the delivery operations to customers and pick-up operations of empty returnable transport items (RTIs) from customers. The problem involves decisions regarding forward and backward vehicle routes, the delivery and collection quantities, the amount of production in terms of the number of filled RTIs, and the number of RTIs produced/ bought by the vendor during the defined planning horizon. The problem considers the holding costs, fixed cost of operating vehicles, fuel consumption cost, producing/buying costs, cleaning costs of RTIs, and loading and unloading costs. We formulate the problem as a mixed integer linear programming model and propose a Relax and Fix based solution approach to solve large instances. We conduct extensive analyses on a case study derived from a fruit and vegetable distribution network and several hypothetical instances. Our analyses investigate the effects of several problem parameter changes (i.e., average collection rate, customer service level, cost of buying crate and handling cost) on the total logistics cost. Additional numerical analyses are performed to demonstrate the usage of the model for evaluating the cost of being more green and environmental-friendly. Moreover, experiments on relatively large-scaled problems allow us to demonstrate the potential benefits of the proposed heuristic     

Supplier development and cost management in Southeast Asia—Results from a field study

This paper is about supplier development when international companies have production sites in Southeast Asia and look for opportunities to switch from international suppliers to local suppliers. We conducted a field study involving site visits to companies in Thailand and Vietnam, and interviews at corporate supply chain departments. Some key observations are: cost management was a dominant motive for taking local supplier development initiatives. Furthermore, local sourcing and local supplier development were important for international companies to improve access to local customer markets. Firms deliberately assessed whether a particular supplier would likely be able to improve sufficiently to warrant investing in supplier development, which typically involved a combination of initiatives, requiring the international firm to take considerable efforts. Local sourcing strategies and priorities for supplier development initiatives tended to focus on items with low supply risk and low volume. These findings are discussed based on transaction cost economics, and we suggest that firms use several ways to reduce the risk of transaction-specific investments in supplier development initiatives.     

How Does Sustainable Development of Supply Chains Make Firms Lean,Green and Profitable? A Resource Orchestration Perspective

This paper theorizes and tests the effects of sustainable development of supply chains on cost‐reduction (lean), environmental (green) and financial (profitable) performance. Based on the resource orchestration theory, we argue that internal, supplier and customer sustainable development each orchestrate different types of resource and therefore their effects vary. Structural equation modeling of data from a survey of 203 Thai manufacturers was used to test a new theoretical model. Results confirm that financial performance was achieved through cost reduction created by customer sustainable development supported by internal and supplier sustainable development. On the other hand, better environmental performance created by internal sustainable development generated no financial gains. However, internal, supplier and customer sustainable development positively affected each other, and by acting together they made firms lean, green and profitable. Copyright © 2017 John Wiley & Sons, Ltd and ERP Environment     

Supplier evaluation and demand allocation among suppliers in a supply chain

This paper presents a hybrid algorithm that prioritizes the suppliers and then allocates the demand among the suppliers. The objective here is to maximize the total purchase value of the items taking into consideration budget constraint, demand condition, delivery lead-time and supplier capacity. Since the problem is multi-criteria decision making, we solve this problem by integrating the supplier rating with mixed linear integer programming method. The customer demand is allocated by using a hybrid algorithm based on the technique for order preference by similarity to ideal solution (TOPSIS) and the mixed linear integer programming (MILP) approaches. The effectiveness of the proposed algorithm is validated with computational results. Drawing to a case, a supplier S₃ is identified as the best supplier by using the TOPSIS method for demand allocation under no restrictions. On the contrary, under constrained scenario, supplier S₂ is selected as the best supplier by using the hybrid algorithm for demand allocation and maximum units are allocated to S₂.     

Toward a conceptualization of supplier-switching processes in business relationships

This paper employs a practice perspective to study and conceptualize supplier-switching processes in business relationships. It is based on case study research of a company in the international marine industry, which intended to switch one of its key suppliers for a new one as a result of cost-cutting strategies and dissatisfaction with the old supplier. The case study describes the process, which ended with the old supplier being only partially switched. The findings show how (partial) switching from one supplier to another happened via three key sub-processes and associated practices, which the involved actors in the case drew upon in the switching process: (1) initiation – a process enabled by legitimizing and search practices; (2) substitution – a process enabled by transfer, translation, and transformation practices; and (3a) stabilization – a process enabled by institutionalizing practices; and (3b) restoration – a process whereby the old supplier is retained as a result of new conditions, this retention being enabled by certain repair practices. By identifying the processes and practices that enable switching to happen, the findings offer an initial conceptualization of supplier-switching processes, which comprises an important and heretofore underexplored aspect of supplier switching. The research highlights the importance of recognizing how relationships embedded in interorganizational routines are produced and reproduced in the switching process through the actions and interactions of the actors involved.