Tactical and operational planning of express intra-city package services

In this paper, we focus on routing and load planning associated with the tactical and operational planning of an express intra-city courier service provider that receives a large number of shipments on a daily basis and is committed to delivering them to their destinations given a short service guarantee. Tactical planning relies on high-level aggregated demand rates over long time periods and takes the form of a multi-commodity service network design where the goal is to identify one path per commodity while maximizing consolidation opportunities in the network. Commodities are transported on their paths by means of a series of continuously operating vehicle cycles, where the structure and number of such cycles are determined concurrently with commodity path assignment decisions in a mixed integer programming. A second model is designed to refine the time allocation along different segments of a commodity path allowing a potential reduction in the number of vehicles required to meet the service guarantee. In operational planning, the focus is narrowed down to a shorter time period, and the baseline plan obtained from the tactical planning phase is adjusted to better fit potential deviations in observed demand patterns compared to the aggregate patterns. Through an extensive computational study designed on the topology of a major US city, we observe that the plans designed at the tactical level guarantee high service levels, which are improved at the operational level by customizing the plan to the special characteristic of a day of operation.     

Gap analysis key to super growth

Micheal J. Kami contributed substantially to the early development of Corporate Planning. He was responsible for establishing the long range planning system at I.B.M. (1959–1964) and at Xerox Corporation (1964–1967). For the Journal he decided to write “something short and simple as a contrast to the rather complicated operations research type articles that appear in the first issue. There is nothing wrong with complexity except that the key and vital issues in corporations are not decided in that way”. In this brief article he, explains the concept of “gap analysis” and explains how it may be used to force top management to make continual and realistic comparisons between their stated objectives and the forecast results of present plans.     

能力共享可降低服务运作系统的应急成本么？——基于两种能力支援的应急决策模型研究

与伙伴企业进行能力共享被很多管理者视为波动运营环境下增强系统的运作柔性和降低运营成本的有效措施之一,但一些大型的服务运作系统,如电力、通信等核心能力在突发事件后损毁的情况下,能力共享是否也可降低应急期间的运作成本？为验证该观点,本文对2006年中国电信海底光缆震断后的应急实践进行了抽象,并研究了能力共享伙伴向受损系统进行正常和快速两种能力支援情景下的多阶段应急决策问题,通过建模和数值分析后发现:能力共享对降低大型服务运作系统的应急成本极为有限、成本的降低极大程度上依赖于自身能力恢复的速度等4个有益应急管理的结论。     

Strategic planning in Tanzania

The Tanzania Wood Industry Corporation is one of the very few parastatal organizations that have developed and introduced a strategic corporate planning process. The novelty of the idea, the many operational problems that surround the managers and the lack of adequate training are some of the problems that have retarded the development and introduction of corporate planning in Tanzania. In 1980 the new CEO of TWICO contracted a Finnish management consulting firm to audit the whole corporation and to recommend a better management practice. Systems manuals were then developed and a grassroots based strategic corporate planning process was then introduced. Now in its third year, the impact on management is very encouraging.     

Capacity Planning and Allocation for Web‐Based Applications

Motivated by the technology division of a financial services firm, we study the problem of capacity planning and allocation for Web‐based applications. The steady growth in Web traffic has affected the quality of service (QoS) as measured by response time (RT), for numerous e‐businesses. In addition, the lack of understanding of system interactions and availability of proper planning tools has impeded effective capacity management. Managers typically make decisions to add server capacity on an ad hoc basis when systems reach critical response levels. Very often this turns out to be too late and results in extremely long response times and the system crashes. We present an analytical model to understand system interactions with the goal of making better server capacity decisions based on the results. The model studies the relationships and important interactions between the various components of a Web‐based application using a continuous time Markov chain embedded in a queuing network as the basic framework. We use several structured aggregation schemes to appropriately represent a complex system, and demonstrate how the model can be used to quickly predict system performance, which facilitates effective capacity allocation decision making. Using simulation as a benchmark, we show that our model produces results within 5% accuracy at a fraction of the time of simulation, even at high traffic intensities. This knowledge helps managers quickly analyze the performance of the system and better plan server capacity to maintain desirable levels of QoS. We also demonstrate how to utilize a combination of dedicated and shared resources to achieve QoS using fewer servers.     

A modelling system for local government resource planning

A major problem in local government is how to maximise the effectiveness of resource allocation. Senior officers and members concerned with corporate and strategic issues must take account of contemporary information of considerable variety and combine this with estimates of the future in their attempts to achieve rational resource allocation. This article describes the development of an experimental computer based corporate modelling system at Clwyd County Council which was designed to support allocation decisions pertaining to a 5 year planning period. It is concluded that a firm basis was achieved for progress towards a comprehensive operational system.     

考虑自取服务和门到门服务的电动汽车物流网络优化策略研究

在环境意识增长与政府政策支持的有利条件下,电动汽车在物流领域得以快速发展。为提高物流服务的效率,降低企业运营成本,文中研究了考虑顾客服务策略的电动物流汽车服务设施选址与配送路径问题。采取顾客自行取货与配送人员送货上门相结合的多样化服务策略,使得服务站点的建设成本、顾客点配送路径成本以及服务站点补货路径成本之和最小。建立了整数规划数学模型,允许配送车辆在服务过程中前往服务站点接受充电服务。其次,提出了基于改进节约算法和禁忌算法的混合启发式算法MCWSA-TS。随后,在小规模算例将CPLEX运算结果与MCWSA-TS进行对比,证明了算法的有效性。最后,采用多组算例探讨了顾客取货半径对运营成本的影响,并对分离配送策略与联合配送策略进行对比分析。实验结果表明,多样化服务策略有助于企业满足顾客取货时间和取货方式的个性化需求。同时,兼顾运营成本与顾客满意度,促进电动汽车参与的物流服务快速发展。     

Bridging the Healthcare Access Divide: A Strategic Planning Model for Rural Telemedicine Network

Balancing access to healthcare and sustaining operational efficiency is a major issue in strategic planning of rural healthcare delivery systems. In this regard, telemedicine is being adopted as a versatile and low cost mechanism for delivering rural healthcare. This article presents a strategic planning model that incorporates different operational and service elements of the rural telemedicine healthcare network. Real‐world data from the rural Black‐belt region in the United States are used in a case study. A novel statistical approach based on decision trees and logistic regression is used to estimate demand of healthcare at the county level. Key issues such as the location of telemedicine health centers, coverage of health services, configuration of medical equipment, and patient travel policies are explored in light of patient demographics, scale of health coverage, and disease prevalence patterns. Results indicate that telemedicine networks can effectively improve healthcare services in rural areas with requisite operational efficiency.     

An Integrated Decision Methodology for Designing and Operating an Air‐Express Courier's Distribution Network*

DHL, an international air‐express courier, has been operating in Hong Kong for many years. In 1998, the new international airport located at a site considerably distant from the old location opened in Hong Kong (HK). Other airport‐related infrastructure facilities have also been developed or are being developed, resulting in major changes in transport structure as well as a shift in customer demand. In this paper a multiyear distribution network is designed for DHL(HK) using an integrated network design methodology, which consists of a macro model and a micro model. The macro model, a mixed 0–1 LP, determines in an aggregate manner the least‐cost distribution network. The micro model, a simulation, evaluates the operational viability and efficacy of the network according to its service coverage and service reliability. We also illustrate how coverage and reliability can be improved via the integrated use of the two models. Extensive discussion on relevant planning and operational issues of an air‐express courier are included. The methodology has been successfully implemented at DHL(HK). It has been used to design the network, to test strategic decisions, and to update the network.     

Humanitarian Funding in a Multi‐Donor Market with Donation Uncertainty

This study analyzes the trade‐off between funding strategies and operational performance in humanitarian operations. If a Humanitarian Organization (HO) offers donors the option of earmarking their donations, HO should expect an increase in total donations. However, earmarking creates constraints in resource allocation that negatively affect HO's operational performance. We study this trade‐off from the perspective of a single HO that maximizes its expected utility as a function of total donations and operational performance. HO implements disaster response and development programs and it operates in a multi‐donor market with donation uncertainty. Using a model inspired by Scarf's minimax approach and the newsvendor framework, we analyze the strategic interaction between HO and its donors. The numerical section is based on real data from 15 disasters during the period 2012–2013. We find that poor operational performance has a larger effect on HO's utility function when donors are more uncertain about HO's expected needs for disaster response. Interestingly, increasing the public awareness of development programs helps HO to get more non‐earmarked donations for disaster response. Increasing non‐earmarked donations improves HO's operational efficiency, which mitigates the impact of donation uncertainty on HO's utility function.     

Assessing Service Level Targets in Production and Inventory Planning*

In production and stock planning, the relationship between customer service, defined as the ability to meet demand for finished goods from in-stock inventory, and expected profits or expected costs can be represented by a simple reliability curve. The shape of this curve depends upon the parameters of the demand process, specifically the expected level of demand, standard deviation and correlation structure, as well as upon the capacities and initial state of the production and inventory system. A model is presented which explicitly determines this trade-off curve for a firm. The model is intended both as an operational model to aid managers in setting revenue and service targets which are compatible with the capacities and resources of the firm, and as a tool for exploring relationships between the parameters of the demand process and the constraints of the physical production and inventory system. The results illustrate that the level of risk depends strongly on the variability of the demand process, the cost structure, the capacities and initial state of the system and, to a lesser extent, the correlation in demand between succeeding periods. Results suggest that establishing service level targets consistent with the firm's strategic orientation must be done in consideration of both the characteristics of the demand process and the capacities of the production and inventory system. The model provides a tool for estimating the premium above unit cost which must be paid to provide a designated service level.     

Freezing the Master Production Schedule Under Demand Uncertainty

Managing the trade-off between achieving a stable master production schedule (MPS) and being responsive to changes in customer requirements is a difficult problem in many firms where providing a high level of customer service is viewed as an important competitive factor. One alternative for managing this trade-off is to freeze an agreed portion of the MPS. This paper investigates the impact of adjustments in the design parameters of MPS freezing methods on two performance measures (MPS lot-sizing cost and stability) under stochastic demand conditions in a rolling planning horizon environment given a service level target. Simulation experiments are reported which indicate that many of the conclusions regarding the design of MPS freezing methods obtained under deterministic demand conditions hold under stochastic demand.     

Ability of Experience Design Elements to Elicit Emotions and Loyalty Behaviors

Experience design, an approach to create emotional connection with guests or customers through careful planning of tangible and intangible service elements, has gained popularity in many hospitality and retail businesses. With ever‐increasing competition, service providers seek to develop loyalty by aggressively designing, continuously innovating, and managing their customer experiences. This article explores the relationship between different service elements designed to create enhanced experience and customer loyalty. In addition, it looks at emotional responses as mediating factors between the physical and relational elements and loyalty behaviors. A model is proposed and tested with a VIP hospitality tent for an internationally renowned touring circus. Results of the study indicate that while a few design elements directly affect loyalty behavior, the relationship between most design elements and loyalty behavior is strongly mediated by eliciting certain types of emotional behavior. This connection has implications for the focus of service managers' efforts in different environments.     

Green supply chain performance measurement using the analytic hierarchy process: a comparative analysis of manufacturing organisations

The main purpose of this research is to develop and deploy an analytical framework for measuring the environmental performance of manufacturing supply chains. This work's theoretical bases combine and reconcile three major areas: supply chain management, environmental management and performance measurement. Researchers have suggested many empirical criteria for green supply chain (GSC) performance measurement and proposed both qualitative and quantitative frameworks. However, these are mainly operational in nature and specific to the focal company. This research develops an innovative GSC performance measurement framework by integrating supply chain processes (supplier relationship management, internal supply chain management and customer relationship management) with organisational decision levels (both strategic and operational). Environmental planning, environmental auditing, management commitment, environmental performance, economic performance and operational performance are the key level constructs. The proposed framework is then applied to three selected manufacturing organisations in the UK. Their GSC performance is measured and benchmarked by using the analytic hierarchy process (AHP), a multiple-attribute decision-making technique. The AHP-based framework offers an effective way to measure and benchmark organisations’ GSC performance. This study has both theoretical and practical implications. Theoretically it contributes holistic constructs for designing a GSC and managing it for sustainability; and practically it helps industry practitioners to measure and improve the environmental performance of their supply chain.     

Updating Inventories of Substitutable Resources in Response to Forecast Updates

We show simple yet optimal results to update the inventory/capacity levels, expected profit, fill rates, and service levels of substitutable resources in response to an updating of the mean demand forecasts for the resources. We find that a change in the mean demand of one resource does not affect the optimal inventory level of any other resource. The results are obtained for demands with location‐scale distribution, and for a revenue structure satisfying a triangle property such that the manager will always use the inventory of a resource to meet her own demand first before using it for substitution. The results for updating the performance measures also extend to managers who maintain non‐optimal inventory/capacity levels. Implications for procurement, sales and operational planning, and multi‐store operations are discussed.     

大规模客运专线网络运营优化模型与求解算法

本文在分析铁路运营优化模型的研究进展的基础上,提出了一个适合大规模客运专线网络运营的优化模型,并提出了求解此模型的列生成算法和启发式快速算法。目的是将客运专线网路的开行方案优化与动态收益优化问题结合起来,解决更大、更复杂的客运网络运营优化问题。模型以列车运营总收益最大化为目标。用随机生成数据进行的模型试验表明,模型及算法可以在较短的时间内求解较大规模的收益管理优化问题。     

RESOURCE PLANNING FOR MULTIPLE PROJECTS *

This paper is concerned with the estimation of the resource requirements to service multiple projects that use many types of resources. It reports on a systematic procedure to determine the low cost levels of these resources, focusing on the two following characteristics: (1) the comparative cost of standard time to overtime in the utilization of these resources for the economical completion of the projects, and (2) the impact of highly expensive equipment in the determination of the economic levels of the manpower resources that combine with the equipment to form a crew. A numerical example is also presented to illustrate the method. Resource planning is of particular interest in the area of multiproject scheduling, since most of the commonly utilized heuristic solution approaches focus on the allocation of a limited set of available resources. In the corporate strategic planning functions, resource planning is particularly important for capital investment, training and development, and procurement scheduling.     

RESOURCE ALLOCATION TO IMPROVE SERVICE QUALITY PERCEPTIONS IN MULTISTAGE SERVICE SYSTEMS

Service quality improvement has become an imperative in today's service firms. In this paper, we present a modeling framework that combines marketing and operations viewpoints for resource allocation. The framework can be used to allocate resources to the different stages of a multistage service system, where the manager's goal is to improve customers' perceptions of service quality, given some budget. Optimal allocation guidelines are provided, and the interplay of three factors on the resulting allocation scheme is captured. These factors are the current level of customers' perceptions of service quality at each stage, the cost of implementing a service quality improvement at each stage, and the importance placed by customers at each stage. Sensitivity analysis to provide additional managerial insights is also performed. We demonstrate the applicability of the modeling framework, using data from a real life health care environment. Model limitations and future research are also discussed.     

Service Package Switching in Hotel Revenue Management Systems

Revenue Management Systems (RMS) are commonly used in the hotel industry to maximize revenues in the short term. The forecasting‐allocation module is a key tactical component of a hotel RMS. Forecasting involves estimating demand for service packages across all stayover nights in a planning horizon. A service package is a unique combination of physical room, amenities, room price, and advance purchase restrictions. Allocation involves parsing the room inventory among these service packages to maximize revenues. Previous research and existing revenue management systems assume the demand for a service package to be independent of which service packages are available for sale. We develop a new forecasting‐allocation approach that explicitly accounts for this dependence. We compare the performance of the new approach against a baseline approach using a realistic hotel RMS simulation. The baseline approach reflects previous research and existing industry practice. The new approach produces an average revenue increase of at least 16% across scenarios that reflect existing industry conditions.     

Shelf Space Management When Demand Depends on the Inventory Level

Two factors that their influence on the demand has been investigated in many papers are (i) the shelf space allocated to a product and to its complement or supplement products and (ii) the instantaneous inventory level seen by customers. Here we analyze the joint shelf space allocation and inventory decisions for multiple items with demand that depends on both factors. The traditional approach to solve inventory models with a state‐dependent demand rate uses a time domain approach. However, this approach often does not lead to closed‐form expressions for the profit rate with both dependencies. We analyze the problem in the inventory domain via level crossing theory. This approach leads to closed‐form expressions for a large set of demand rate functions exhibiting both dependencies. These closed‐form expressions substantially simplify the search for optimal solutions; thus we use them to solve the joint inventory control and shelf space allocation problem. We consider examples with two products to investigate the significance of capturing both demand dependencies. We show that in some settings it is important to capture both dependencies. We consider two heuristics, each one of them ignores one of the two dependencies. Using these heuristics it seems that ignoring the dependency on the shelf space might be less harmful than ignoring the dependency on the inventory level, which, based on computational results, can lead to profit losses of more than 6%. We demonstrate that retailers should use their operational control, e.g., reorder point, to promote higher demand products.