IDEAS home Printed from https://ideas.repec.org/a/eee/transe/v145y2021ics1366554520308115.html
   My bibliography  Save this article

Supply chain network design with coordinated inventory control

Author

Listed:
  • Darmawan, Agus
  • Wong, Hartanto
  • Thorstenson, Anders

Abstract

In this paper, we present models and solution methods for supply chain network design that not only integrate the location-transportation and inventory problems, but also consider the implementation of coordinated inventory control in the network. We compare two different strategies differentiated by whether or not coordinated inventory control is implemented. Due to the complexity of the optimization problems, we develop heuristic methods to solve the problems generated by the two strategies. The numerical results show the benefits of considering coordinated inventory control by reducing the inventory as well as the total costs in the supply chain network. The structure of the network can also be affected by the coordinated inventory control. The effects are most pronounced when the inventory holding cost rate is high.

Suggested Citation

  • Darmawan, Agus & Wong, Hartanto & Thorstenson, Anders, 2021. "Supply chain network design with coordinated inventory control," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 145(C).
    • Handle: RePEc:eee:transe:v:145:y:2021:i:c:s1366554520308115
    DOI: 10.1016/j.tre.2020.102168
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1366554520308115
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.tre.2020.102168?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Tancrez, Jean-Sébastien & Lange, Jean-Charles & Semal, Pierre, 2012. "A location-inventory model for large three-level supply chains," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 48(2), pages 485-502.
    2. R.P. Manatkar & Kondapaneni Karthik & Sri Krishna Kumar & Manoj Kumar Tiwari, 2016. "An integrated inventory optimization model for facility location-allocation problem," International Journal of Production Research, Taylor & Francis Journals, vol. 54(12), pages 3640-3658, June.
    3. Sven Axsäter & Christian Howard & Johan Marklund, 2013. "A distribution inventory model with transshipments from a support warehouse," IISE Transactions, Taylor & Francis Journals, vol. 45(3), pages 309-322.
    4. Johan Marklund & Kaj Rosling, 2012. "Lower Bounds and Heuristics for Supply Chain Stock Allocation," Operations Research, INFORMS, vol. 60(1), pages 92-105, February.
    5. Schuster Puga, Matías & Tancrez, Jean-Sébastien, 2017. "A heuristic algorithm for solving large location–inventory problems with demand uncertainty," European Journal of Operational Research, Elsevier, vol. 259(2), pages 413-423.
    6. Nozick, Linda K. & Turnquist, Mark A., 2001. "A two-echelon inventory allocation and distribution center location analysis," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 37(6), pages 425-441, December.
    7. Stephen C. Graves & Sean P. Willems, 2000. "Optimizing Strategic Safety Stock Placement in Supply Chains," Manufacturing & Service Operations Management, INFORMS, vol. 2(1), pages 68-83, June.
    8. Kenneth F. Simpson, 1958. "In-Process Inventories," Operations Research, INFORMS, vol. 6(6), pages 863-873, December.
    9. Mark Daskin & Collette Coullard & Zuo-Jun Shen, 2002. "An Inventory-Location Model: Formulation, Solution Algorithm and Computational Results," Annals of Operations Research, Springer, vol. 110(1), pages 83-106, February.
    10. Schuster Puga, Matías & Minner, Stefan & Tancrez, Jean-Sébastien, 2019. "Two-stage supply chain design with safety stock placement decisions," International Journal of Production Economics, Elsevier, vol. 209(C), pages 183-193.
    11. Kang, Jae-Hun & Kim, Yeong-Dae, 2012. "Inventory control in a two-level supply chain with risk pooling effect," International Journal of Production Economics, Elsevier, vol. 135(1), pages 116-124.
    12. Sourirajan, Karthik & Ozsen, Leyla & Uzsoy, Reha, 2009. "A genetic algorithm for a single product network design model with lead time and safety stock considerations," European Journal of Operational Research, Elsevier, vol. 197(2), pages 599-608, September.
    13. Tsao, Yu-Chung & Mangotra, Divya & Lu, Jye-Chyi & Dong, Ming, 2012. "A continuous approximation approach for the integrated facility-inventory allocation problem," European Journal of Operational Research, Elsevier, vol. 222(2), pages 216-228.
    14. Sven Axsäter & Johan Marklund, 2008. "Optimal Position-Based Warehouse Ordering in Divergent Two-Echelon Inventory Systems," Operations Research, INFORMS, vol. 56(4), pages 976-991, August.
    15. Park, Sukun & Lee, Tae-Eog & Sung, Chang Sup, 2010. "A three-level supply chain network design model with risk-pooling and lead times," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 46(5), pages 563-581, September.
    16. Robin Roundy, 1985. "98%-Effective Integer-Ratio Lot-Sizing for One-Warehouse Multi-Retailer Systems," Management Science, INFORMS, vol. 31(11), pages 1416-1430, November.
    17. Forsberg, Rolf, 1997. "Exact evaluation of (R, Q)-policies for two-level inventory systems with Poisson demand," European Journal of Operational Research, Elsevier, vol. 96(1), pages 130-138, January.
    18. Bernhard Fleischmann, 2016. "The impact of the number of parallel warehouses on total inventory," OR Spectrum: Quantitative Approaches in Management, Springer;Gesellschaft für Operations Research e.V., vol. 38(4), pages 899-920, October.
    19. Kostis Taxakis & Chrissoleon Papadopoulos, 2016. "A design model and a production–distribution and inventory planning model in multi-product supply chain networks," International Journal of Production Research, Taylor & Francis Journals, vol. 54(21), pages 6436-6457, November.
    20. Andersson, Jonas & Marklund, Johan, 2000. "Decentralized inventory control in a two-level distribution system," European Journal of Operational Research, Elsevier, vol. 127(3), pages 483-506, December.
    21. Melo, M.T. & Nickel, S. & Saldanha-da-Gama, F., 2009. "Facility location and supply chain management - A review," European Journal of Operational Research, Elsevier, vol. 196(2), pages 401-412, July.
    22. Miranda, Pablo A. & Garrido, Rodrigo A., 2009. "Inventory service-level optimization within distribution network design problem," International Journal of Production Economics, Elsevier, vol. 122(1), pages 276-285, November.
    23. Jia Shu & Chung-Piaw Teo & Zuo-Jun Max Shen, 2005. "Stochastic Transportation-Inventory Network Design Problem," Operations Research, INFORMS, vol. 53(1), pages 48-60, February.
    24. Chung-Piaw Teo & Jia Shu, 2004. "Warehouse-Retailer Network Design Problem," Operations Research, INFORMS, vol. 52(3), pages 396-408, June.
    25. Nozick, Linda K. & Turnquist, Mark A., 1998. "Integrating inventory impacts into a fixed-charge model for locating distribution centers," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 34(3), pages 173-186, September.
    26. Miranda, Pablo A. & Garrido, Rodrigo A., 2004. "Incorporating inventory control decisions into a strategic distribution network design model with stochastic demand," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 40(3), pages 183-207, May.
    27. Burcu B. Keskin & Halit Üster, 2012. "Production/distribution system design with inventory considerations," Naval Research Logistics (NRL), John Wiley & Sons, vol. 59(2), pages 172-195, March.
    28. Francisco Silva & Lucia Gao, 2013. "A Joint Replenishment Inventory-Location Model," Networks and Spatial Economics, Springer, vol. 13(1), pages 107-122, March.
    29. Farahani, Reza Zanjirani & Elahipanah, Mahsa, 2008. "A genetic algorithm to optimize the total cost and service level for just-in-time distribution in a supply chain," International Journal of Production Economics, Elsevier, vol. 111(2), pages 229-243, February.
    30. Yao, Zhishuang & Lee, Loo Hay & Jaruphongsa, Wikrom & Tan, Vicky & Hui, Chen Fei, 2010. "Multi-source facility location-allocation and inventory problem," European Journal of Operational Research, Elsevier, vol. 207(2), pages 750-762, December.
    31. Alper Atamtürk & Gemma Berenguer & Zuo-Jun (Max) Shen, 2012. "A Conic Integer Programming Approach to Stochastic Joint Location-Inventory Problems," Operations Research, INFORMS, vol. 60(2), pages 366-381, April.
    32. Zuo-Jun Max Shen & Collette Coullard & Mark S. Daskin, 2003. "A Joint Location-Inventory Model," Transportation Science, INFORMS, vol. 37(1), pages 40-55, February.
    33. Reza Zanjirani Farahani & Hannaneh Rashidi Bajgan & Behnam Fahimnia & Mohamadreza Kaviani, 2015. "Location-inventory problem in supply chains: a modelling review," International Journal of Production Research, Taylor & Francis Journals, vol. 53(12), pages 3769-3788, June.
    34. Romeijn, H. Edwin & Shu, Jia & Teo, Chung-Piaw, 2007. "Designing two-echelon supply networks," European Journal of Operational Research, Elsevier, vol. 178(2), pages 449-462, April.
    35. Ahmadi Javid, Amir & Azad, Nader, 2010. "Incorporating location, routing and inventory decisions in supply chain network design," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 46(5), pages 582-597, September.
    36. Mehrdad Shahabi & Shirin Akbarinasaji & Avinash Unnikrishnan & Rachel James, 2013. "Integrated Inventory Control and Facility Location Decisions in a Multi-Echelon Supply Chain Network with Hubs," Networks and Spatial Economics, Springer, vol. 13(4), pages 497-514, December.
    37. Fangruo Chen & Yu-Sheng Zheng, 1997. "One-Warehouse Multiretailer Systems with Centralized Stock Information," Operations Research, INFORMS, vol. 45(2), pages 275-287, April.
    38. Yu-Sheng Zheng, 1992. "On Properties of Stochastic Inventory Systems," Management Science, INFORMS, vol. 38(1), pages 87-103, January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Saldanha-da-Gama, Francisco, 2022. "Facility Location in Logistics and Transportation: An enduring relationship," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 166(C).
    2. Guo, Yuhan & Yu, Junyu & Allaoui, Hamid & Choudhary, Alok, 2022. "Lateral collaboration with cost-sharing in sustainable supply chain optimisation: A combinatorial framework," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 157(C).
    3. Ardavan Babaei & Majid Khedmati & Mohammad Reza Akbari Jokar, 2023. "A new branch and efficiency algorithm for an optimal design of the supply chain network in view of resilience, inequity and traffic congestion," Annals of Operations Research, Springer, vol. 321(1), pages 49-78, February.
    4. Jahani, Hamed & Chaleshtori, Amir Eshaghi & Khaksar, Seyed Mohammad Sadegh & Aghaie, Abdollah & Sheu, Jiuh-Biing, 2022. "COVID-19 vaccine distribution planning using a congested queuing system—A real case from Australia," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 163(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Aaron Guerrero Campanur & Elias Olivares-Benitez & Pablo A. Miranda & Rodolfo Eleazar Perez-Loaiza & Jose Humberto Ablanedo-Rosas, 2018. "Design of a Logistics Nonlinear System for a Complex, Multiechelon, Supply Chain Network with Uncertain Demands," Complexity, Hindawi, vol. 2018, pages 1-16, November.
    2. Schuster Puga, Matías & Tancrez, Jean-Sébastien, 2017. "A heuristic algorithm for solving large location–inventory problems with demand uncertainty," European Journal of Operational Research, Elsevier, vol. 259(2), pages 413-423.
    3. Schuster Puga, Matías & Minner, Stefan & Tancrez, Jean-Sébastien, 2019. "Two-stage supply chain design with safety stock placement decisions," International Journal of Production Economics, Elsevier, vol. 209(C), pages 183-193.
    4. Jahani, Hamed & Abbasi, Babak & Sheu, Jiuh-Biing & Klibi, Walid, 2024. "Supply chain network design with financial considerations: A comprehensive review," European Journal of Operational Research, Elsevier, vol. 312(3), pages 799-839.
    5. Shahabi, Mehrdad & Unnikrishnan, Avinash & Jafari-Shirazi, Ehsan & Boyles, Stephen D., 2014. "A three level location-inventory problem with correlated demand," Transportation Research Part B: Methodological, Elsevier, vol. 69(C), pages 1-18.
    6. Shahabi, Mehrdad & Tafreshian, Amirmahdi & Unnikrishnan, Avinash & Boyles, Stephen D., 2018. "Joint production–inventory–location problem with multi-variate normal demand," Transportation Research Part B: Methodological, Elsevier, vol. 110(C), pages 60-78.
    7. Shu, Jia & Li, Zhengyi & Shen, Houcai & Wu, Ting & Zhong, Weijun, 2012. "A logistics network design model with vendor managed inventory," International Journal of Production Economics, Elsevier, vol. 135(2), pages 754-761.
    8. Tancrez, Jean-Sébastien & Lange, Jean-Charles & Semal, Pierre, 2012. "A location-inventory model for large three-level supply chains," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 48(2), pages 485-502.
    9. Mehrdad Shahabi & Shirin Akbarinasaji & Avinash Unnikrishnan & Rachel James, 2013. "Integrated Inventory Control and Facility Location Decisions in a Multi-Echelon Supply Chain Network with Hubs," Networks and Spatial Economics, Springer, vol. 13(4), pages 497-514, December.
    10. Zhang, Zhi-Hai & Unnikrishnan, Avinash, 2016. "A coordinated location-inventory problem in closed-loop supply chain," Transportation Research Part B: Methodological, Elsevier, vol. 89(C), pages 127-148.
    11. Ahmadi-Javid, Amir & Hoseinpour, Pooya, 2015. "A location-inventory-pricing model in a supply chain distribution network with price-sensitive demands and inventory-capacity constraints," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 82(C), pages 238-255.
    12. Puntipa Punyim & Ampol Karoonsoontawong & Avinash Unnikrishnan & Chi Xie, 2018. "Tabu Search Heuristic for Joint Location-Inventory Problem with Stochastic Inventory Capacity and Practicality Constraints," Networks and Spatial Economics, Springer, vol. 18(1), pages 51-84, March.
    13. Tsao, Yu-Chung & Lu, Jye-Chyi, 2012. "A supply chain network design considering transportation cost discounts," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 48(2), pages 401-414.
    14. de Kok, Ton & Grob, Christopher & Laumanns, Marco & Minner, Stefan & Rambau, Jörg & Schade, Konrad, 2018. "A typology and literature review on stochastic multi-echelon inventory models," European Journal of Operational Research, Elsevier, vol. 269(3), pages 955-983.
    15. Zheng, Xiaojin & Yin, Meixia & Zhang, Yanxia, 2019. "Integrated optimization of location, inventory and routing in supply chain network design," Transportation Research Part B: Methodological, Elsevier, vol. 121(C), pages 1-20.
    16. Amiri-Aref, Mehdi & Klibi, Walid & Babai, M. Zied, 2018. "The multi-sourcing location inventory problem with stochastic demand," European Journal of Operational Research, Elsevier, vol. 266(1), pages 72-87.
    17. Yazdani, Majid & Aouam, Tarik, 2023. "Shipment planning and safety stock placement in maritime supply chains with stochastic demand and transportation times," International Journal of Production Economics, Elsevier, vol. 263(C).
    18. Wenjun Ni & Jia Shu & Miao Song & Dachuan Xu & Kaike Zhang, 2021. "A Branch-and-Price Algorithm for Facility Location with General Facility Cost Functions," INFORMS Journal on Computing, INFORMS, vol. 33(1), pages 86-104, January.
    19. Shuangyan Li & Xialian Li & Dezhi Zhang & Lingyun Zhou, 2017. "Joint Optimization of Distribution Network Design and Two-Echelon Inventory Control with Stochastic Demand and CO2 Emission Tax Charges," PLOS ONE, Public Library of Science, vol. 12(1), pages 1-22, January.
    20. Burcu B. Keskin & Halit Üster, 2012. "Production/distribution system design with inventory considerations," Naval Research Logistics (NRL), John Wiley & Sons, vol. 59(2), pages 172-195, March.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:transe:v:145:y:2021:i:c:s1366554520308115. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/600244/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.