Extending the pursuit of flow (lean) management to encompass sales,general and administrative functions

Abstract

Operations management tends to be treated independent of other business functions—the silo syndrome. In this article, we call for operations management (OM) to broaden its perspective by strengthening linkages with other functions of the business, thereby to realize competitive advantages and strategic integration, as well as to avoid resource misallocation. The issues involved are presented and tested by examining the effects of intermeshing sales, general and administrative (SG&A) expenditures with customer-centred flow manufacturing, the latter being measured by system inventory as surrogate for customer lead time. In doing so, we designate trends in total inventory as the independent variable—representative of a dominant target of flow/lean management—and trends in SG&A expenditures as the output variable. The research tasks are enabled by inventory and SG&A data being widely available in companies’ audited financial statements. Such hard data offers methodological and validation advantages over, say, opinion-based survey research. The research adds bulk to existing flow/lean management theory and can be helpful in inducing primary business functions (e.g. OM, finance, sales and marketing) and sub-functions (such as SG&A and management accounting) to engage in cross-functional efforts in the cause of flow-oriented process improvement and company competitiveness.     

Premium Risk and Managed Care

This paper analyzes how individuals can insure premium risk and obtain high quality health insurance in a managed care environment. Insurers choose health care providers. Only a fraction of high risk individuals is unambiguously identifiable in front of a court. Premium insurance is not able to reach a first-best risk allocation while health insurers have an incentive to stint on quality under guaranteed renewable contracts. It is shown that a contract exists which can implement the first-best. This contract specifies payments to individuals and a third party upon switching to create a credible self-commitment by the insurer to provide high quality.     

航空公司机上周转品多基地库存优化模型

在民航业日益激烈的市场竞争环境下，航空公司对成本控制的精细化管理显得尤为重要。本文基于航空公司的实际背景，针对为旅客提供的机上周转品，建立了一个多基地库存系统的库存优化模型。该模型以系统的总库存成本最小为目标，在考虑需求、回收、调运、安全库存等因素下，决策一个订货周期内的订货及调运方案。基于最优解的分析，在成本参数满足一定条件下，可以得到系统最优的期初订货量；在此基础上，可以将该模型转化为一个网络流模型，参考最小费用最大流算法，设计了一个多项式求解算法来求解该网络流模型，进而得到各基地之间的最优调运量，并证明该算法的最优性；此外，根据期初订货量可行解的范围，设计了一个求解原库存模型的启发式算法。通过实例分析，验证了该模型与两种算法的有效性。     

Postponement implementation in integrated production and inventory plan under deterioration effects: a case study of a juice producer with limited storage capacity

Abstract

The aim of this study is to develop a production and inventory plan for a fresh apple juice producer. During harvest season, the producer extracts premium juice from freshly picked apples and keeps an inventory of these premium apples in his temperature-controlled storage facility. The producer extracts also regular juice from regular apples purchased from third-party storages. To satisfy future demand, the producer carries inventories of juice and apple. The levels of apple inventories are constrained by the producer’s limited storage space, but he can replenish regular apples. To assist the producer in facing demand uncertainty and deterioration of apples, we develop a production and inventory plan that incorporates postponement to mitigate demand uncertainty. As postponement decisions are shaped by the cost structure of inventories, we integrate in one model the postponement decisions and the deterioration mitigation decisions that can alter the inventory costs. We build multi-period stochastic programming with recourse model to determine juice batch sizes and apple inventories that maximize the producer’s expected profit. The optimal solution illustrates the use of time and form postponements. We discuss the interactions between postponement implementation and decisions to mitigate apples deterioration. We compare the production and inventory plans with and without postponement and with and without apple deterioration. We also present sensitivity analyses for the plan under varying inventory cost and storage space.     

The resource constrained multi-item inventory problem with price discount: a geometric programming approach

In this paper we present a geometric programming approach for determining the inventory policy for multiple items having price discount and a limit on the total average inventory of all the items. An example is solved to illustrate the method.     

关于财务软件中商品单价出现负数问题的分析与对策

使用财务软件核算存货时，存货单价及数量会出现负数，可运用三种方法解决：重新建账法、追溯调整法、逐个调整法。使存货金额反映出企业真实数据。     

新鲜产品跨季销售中的动态库存管理策略研究

新鲜产品在跨季销售过程中不可避免地发生变质，给分销商带来较大的风险。本文基于一个两阶段决策模型来帮助分销商动态管理库存，在考虑产品质量随机变化的情形下更好地匹配供给与需求。具体来说，在采摘季节确定采购的总数量；在销售季节结合产品新鲜度的演变以及剩余库存水平的变化动态地决策每周期的销售量，以实现期望利润的最大化。我们采用动态规划模型分析销售期的库存管理决策，刻画了利润函数和最优决策的结构性质，并考察了库存量、新鲜度水平和价格等参数对最优库存决策的影响。数值实验结果表明，当产品变质风险大、需求不确定性低时，动态库存管理策略相比静态策略的利润改进效果更为显著。     

Profitability of Service‐Level‐Based Price Differentiation with Inventory Rationing

In this paper, we study the profitability of service‐level‐based price differentiation (SLBPD) in an inventory‐rationing context. SLBPD implies that a company offers several combinations of prices and guaranteed service levels, from which customers self‐select; different customers choose different offerings because they incur different shortage costs if an order is not fulfilled immediately. We develop an analytical model for SLBPD and explore if and when such a service differentiation strategy yields higher profits than a single undifferentiated offering. The results of our analyses suggest that SLBPD is profitable only if a company faces pricing restrictions, e.g., because of competitive pressure or regulatory restrictions. We develop necessary and sufficient conditions under which a specific and relevant form of SLBPD (called “service‐level‐based upselling”) is profitable, and provide an algorithm to compute the optimal parameters of such a policy. Based on this algorithm we carry out numerical analyses that allow us to characterize the profit increment of service‐level‐based upselling. We derive managerial insights into the attractiveness of SLBPD and explain how our basic analytical framework can be extended to account for more complex practical features.     

Looking Upstream: Optimal Policies for a Class of Capacitated Multi‐Stage Inventory Systems

We consider a multi‐stage inventory system with stochastic demand and processing capacity constraints at each stage, for both finite‐horizon and infinite‐horizon, discounted‐cost settings. For a class of such systems characterized by having the smallest capacity at the most downstream stage and system utilization above a certain threshold, we identify the structure of the optimal policy, which represents a novel variation of the order‐up‐to policy. We find the explicit functional form of the optimal order‐up‐to levels, and show that they depend (only) on upstream echelon inventories. We establish that, above the threshold utilization, this optimal policy achieves the decomposition of the multidimensional objective cost function for the system into a sum of single‐dimensional convex functions. This decomposition eliminates the curse of dimensionality and allows us to numerically solve the problem. We provide a fast algorithm to determine a (tight) upper bound on this threshold utilization for capacity‐constrained inventory problems with an arbitrary number of stages. We make use of this algorithm to quantify upper bounds on the threshold utilization for three‐, four‐, and five‐stage capacitated systems over a range of model parameters, and discuss insights that emerge.     

Storage constrained vendor managed inventory models with unequal shipment frequencies

We consider a supply chain where a vendor manages its multiple retailers' stocks under a vendor managed inventory (VMI) contract that specifies upper stock limits at the retailers' premises and overstock costs for exceeding those limits. We formulate a mixed integer nonlinear program that minimizes total supply chain costs and allows unequal shipment frequencies to the retailers. We develop an algorithm to solve its relaxed version which provides a lower bound cost solution. We propose a cost efficient heuristic procedure to generate delivery schedules to the retailers. We conduct a sensitivity analysis to provide insights on the performance of the proposed heuristic. Results show that our heuristic finds optimal or near optimal solutions, and it proposes substantial savings compared to the total supply-chain cost in the cases where there is no VMI and where there is VMI but with equal shipment frequencies to retailers.