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Estimating distribution costs in a supply chain network optimisation tool, a case study
Luleå University of Technology, Department of Business Administration, Technology and Social Sciences, Business Administration and Industrial Engineering.
Number of Authors: 12016 (English)In: Operational Research, ISSN 1109-2858, E-ISSN 1866-1505, Vol. 16, no 3, p. 469-499Article in journal (Refereed) Published
Abstract [en]

In a complex logistic environment it is critical to have efficient methods and tools to evaluate and improve the its efficiency. These tools must support the analysis with accurate results, but they must also be fast and easy enough to be used use in a complex practical setting. In this paper we present and discuss a deterministic single-period single-sourcing LP/MIP based method that the Linde Group has used for more than 100 projects for optimising the logistic network in the air-gas cylinder business. The model, called CSS (cylinder supply structure), includes a multi-echelon logistic network with transportation between plants and warehouses and distribution to several end-customers. The model allows deliveries to customers from all echelons in the supply network. Both the downstream flow of full cylinders and the upstream return of empty cylinders are included in the model. In general, more than 75 % of the total transportation- and distribution costs are caused by the final distribution to customers in a supply network as above. This paper will in particular analyse the distribution part of this model; how it is designed and how the cost is estimated. In order to evaluate the accuracy of the method we use empirical data to compare the model results with empirical results. The results showed that from the beginning the model overestimated the expected distances and costs for the distribution. With a rework and improved method to estimate the distribution cost, the model significantly improved its accuracy

Place, publisher, year, edition, pages
2016. Vol. 16, no 3, p. 469-499
National Category
Production Engineering, Human Work Science and Ergonomics
Research subject
Industrial Logistics
Identifiers
URN: urn:nbn:se:ltu:diva-6201DOI: 10.1007/s12351-015-0209-6ISI: 000386617600005Scopus ID: 2-s2.0-84944699132Local ID: 4659a170-d8ba-4473-9c57-4ee1fc761f7aOAI: oai:DiVA.org:ltu-6201DiVA, id: diva2:979078
Note

Validerad; 2016; Nivå 2; 2016-10-31 (andbra)

Available from: 2016-09-29 Created: 2016-09-29 Last updated: 2018-07-10Bibliographically approved
In thesis
1. Heuristic Mathematical Programming Methods for Lot-sizing, Inventory Control, and Distribution Cost Estimation in the Supply Chain
Open this publication in new window or tab >>Heuristic Mathematical Programming Methods for Lot-sizing, Inventory Control, and Distribution Cost Estimation in the Supply Chain
2017 (English)Doctoral thesis, comprehensive summary (Other academic)
Alternative title[en]
Abstract [en]

The supply function has an important role to support the business to create a customer value. Two important parts of this process is to have the warehouses and production sites in the right location and to have the right items stocked at the right level.

 

This thesis is concerned with those two parts of the supply chain management.

Three different areas of inventory control are dealt with. In the first part we consider the classical dynamic lot size problem without backlogging. The second part deals with estimation of holding and shortage costs in two-level distribution inventory systems. In the third part of the thesis we consider the localisation problem in a multi-level supply network system where items are consolidated at a warehouse and distributed to customers on routes.

 

Within the area of inventory control we have evaluated a method earlier suggested by Axsäter (1988), the method is evaluated using a set of test problems and compared other heuristic methods, including the well-known Silver-Meal’s method (Silver and Meal, 1973).  The result shows that the method suggested by Axsäter does perform better than the other methods. In the latest contribution we point to the important differences between Least Period Cost and Silver-Meal when several periods have zero demand. In the area of inventory control we have also studied a two-echelon inventory system where we present methods for estimating the shortage- and stockholding costs in such inventory systems.

 

The second part subject of the thesis concerns supply network optimization. We present a MIP formulation of the problem and evaluate in detail the approximation of the distribution cost when customers are delivered on multi-stop routes. An improved method for estimating the distribution is presented.

 

Besides this introductory overview five research papers are included in the thesis. The first and the last paper consider evaluation of dynamic lot sizing heuristics. The second and third paper deals with cost evaluation of a stochastic two-echelon inventory system and the forth paper with evaluation of methods for estimating distribution costs in a supply network.

Place, publisher, year, edition, pages
Luleå: Luleå University of Technology, 2017
Series
Doctoral thesis / Luleå University of Technology 1 jan 1997 → …, ISSN 1402-1544
Keywords
Dynamic lot size, Multi-echelon inventory systems, Supply network optimization, Distribution, Location analysis, Distribution cost approximation
National Category
Other Engineering and Technologies not elsewhere specified
Research subject
Industrial Logistics
Identifiers
urn:nbn:se:ltu:diva-66246 (URN)978-91-7583-994-3 (ISBN)978-91-7583-995-0 (ISBN)
Public defence
2017-12-07, A3024, Luleå, 10:00 (English)
Opponent
Supervisors
Available from: 2017-10-25 Created: 2017-10-25 Last updated: 2019-09-11Bibliographically approved

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