Coordination of a two-level supply chain with contracts

We consider the coordination of planning decisions of a single product in a supply chain composed of one supplier and one retailer, by using contracts. We assume that the retailer has the market power: he can impose his optimal replenishment plan to the supplier. Our aim is to minimize the supplier’s cost without increasing the … Read more

Tackling Industrial-Scale Supply Chain Problems by Mixed-Integer Programming

SAP’s decision support systems for optimized supply network planning rely on mixed-integer programming as the core engine to compute optimal or near-optimal solutions. The modeling flexibility and the optimality guarantees provided by mixed-integer programming greatly aid the design of a robust and future-proof decision support system for a large and diverse customer base. In this … Read more

Time (in)consistency of multistage distributionally robust inventory models with moment constraints

Recently, there has been a growing interest in developing inventory control policies which are robust to model misspecification. One approach is to posit that nature selects a worst-case distribution for any relevant stochastic primitives from some pre-specified family. Several communities have observed that a subtle phenomena known as time inconsistency can arise in this framework. … Read more

A Multi-Product Risk-Averse Newsvendor with Exponential Utility Function

We consider a multi-product newsvendor using an exponential utility function. We first establish a few basic properties for the newsvendor regarding the convexity of the model and monotonicity of the impact of risk aversion on the solution. When the product demands are independent and the ratio of the degree of risk aversion to the number … Read more

Exact and heuristic solutions of the global supply chain problem with transfer pricing

We examine the example of a multinational corporation that attempts to maximize its global after tax profits by determining the flow of goods, the transfer prices, and the transportation cost allocation between each of its subsidiaries. Vidal and Goetschalckx (2001) proposed a bilinear model of this problem and solved it by an Alternate heuristic. We … Read more

Integer Programming Solution Approach for Inventory-Production-Distribution Problems with Direct Shipments

We construct an integrated multi-period inventory-production-distribution replenishment plan for three-stage supply chains. The supply chain maintains close-relationships with a small group of suppliers, and the nature of the products (bulk, chemical, etc.) makes it more economical to rely upon a direct shipment, full-truck load distribution policy between supply chain nodes. In this paper, we formulate … Read more

A Robust Optimization Framework for Analyzing Distribution Systems with Transshipment

This paper studies a distribution system consisting of multiple retail locations with transshipment operations among the retailers. Due to the difficulty in computing the optimal solution imposed by the transshipment operations and in estimating shortage cost from a practical perspective, we propose a robust optimization framework for analyzing the impact of transshipment operations on such … Read more

Cover Inequalities for Binary-Integer Knapsack Constraints

We consider knapsack constraints involving one general integer and many binary variables. We introduce the concept of a cover for such a constraint and we construct a new family of valid inequalities based on this concept. We generalize this idea to extended covers, and we propose a specialized lifting procedure for cover inequalities. Finally, we … Read more