Optimal Design of Process-Inventory Network Considering Late Delivery Costs

Suh, Kuen-Hack; Yi, Gyeongbeom

doi:10.5302/j.icros.2010.16.5.476

Journal of Institute of Control, Robotics and Systems

2010

DOI: 10.5302/j.icros.2010.16.5.476

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Optimal Design of Process-Inventory Network Considering Late Delivery Costs

Kuen-Hack Suh¹,

Gyeongbeom Yi²

Abstract: This study deals with stockout costs in the supply chain optimization model under the framework of batch-storage network. Stockout is very popular in chemical industries. Estimating stockout cost involves an understanding of customer reactions to a seller being out of stock at the time the customer wants to buy an item. This involves massively non-trivial work such as direct customer interviews and extensive mail survey. In this study, we will introduce a new interpretation of stockout costs combined with batc… Show more

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Cited by 4 publications

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Optimal Design of Multiperiod Process-Inventory Network Considering Transportation Processes

Suh¹,

Yi²

2012

Journal of Institute of Control, Robotics and Systems

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Abstract:The optimal design of batch-storage network by using periodic square wave model provides analytical lot sizing equations for a complex supply chain network characterized as multi-supplier, multi-product, multi-stage, non-serial, multi-customer, cyclic system including recycling and/or remanufacturing. The network structure includes multiple currency flows as well as material flows. The processes are represented by multiple feedstock/product materials with fixed composition which are very suitable for production processes. In this study, transportation processes that carry multiple materials with unknown composition are added and the time frame is changed from single period into multiple periods in order to represent nonperiodic parameter variations. The objective function of the optimization involves minimizing the opportunity costs of annualized capital investments and currency/material inventories minus the benefit to stockholders in the numeraire currency. The expressions for the Kuhn-Tucker conditions of the optimization problem are reduced to a multiperiod subproblem for average flow rates and analytical lot-sizing equations. The multiperiod lot sizing equations are different from single period ones. The effects of corporate income taxes, interest rates and exchange rates are incorporated.Keywords: optimal lot size, process-inventory network, transportation processes, multinational corporation

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Optimal Design of Multiperiod Process-Inventory Network Considering Transportation Processes

Suh¹,

Yi²

2012

Journal of Institute of Control, Robotics and Systems

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Optimal Designofa Process-Inventory Network Under Infrequent Shutdowns

Yi¹

2013

Journal of Institute of Control, Robotics and Systems

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Abstract:The purpose of this study is to find the analytic solution for determining the optimal capacity (lot-size) of a batch-storage network to meet the finished product demand under infrequent shutdowns. Batch processes are bound to experience random but infrequent operating time losses. Two common remedies for these failures are duplicating another process or increasing the process and storage capacity, both of which are very costly in modern manufacturing systems. An optimization model minimizing the total cost composed of setup and inventory holding costs as well as the capital costs of constructing processes and storage units is pursued with the framework of a batch-storage network of which flows are susceptible to infrequent shutdowns. The superstructure of the plant consists of a network of serially and/or parallel interlinked batch processes and storage units. The processes transform a set of feedstock materials into another set of products with constant conversion factors.A novel production and inventory analysis method, the PSW (Periodic Square Wave) model, is applied. The advantage of the PSW model stems from the fact it provides a set of simple analytic solutions in spite of a realistic description of the material flow between processes and storage units. The resulting simple analytic solution can greatly enhance a proper and quick investment decision at the early plant design stagewhen confronted with diverse economic situations.

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Optimal Design of Process-Inventory Network Considering Backordering Costs

Yi¹

2014

Journal of Institute of Control, Robotics and Systems

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Product shortage which causes backordering and/or lost sales cost is very popular in chemical industries, especially in commodity polymer business. This study deals with backordering cost in the supply chain optimization model under the framework of process-inventory network. Classical economic order quantity model with backordering cost suggested optimal time delay and lot size of the final product delivery. Backordering can be compensated by advancing production/transportation of it or purchasing substitute product from third party as well as product delivery delay in supply chain network. Optimal solutions considering all means to recover shortage are more complicated than the classical one. We found three different solutions depending on parametric range and variable bounds. Optimal capacity of production/transportation processes associated with the product in backordering can be different from that when the product is not in backordering. The product shipping cycle time computed in this study was smaller than that optimized by the classical EOQ model.

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Optimal Design of Process-Inventory Network Considering Late Delivery Costs

Cited by 4 publications

References 4 publications

Optimal Design of Multiperiod Process-Inventory Network Considering Transportation Processes

Optimal Design of Multiperiod Process-Inventory Network Considering Transportation Processes

Optimal Designofa Process-Inventory Network Under Infrequent Shutdowns

Optimal Design of Process-Inventory Network Considering Backordering Costs

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