SimHeuristics for
Supply Chain Management
Helena Ramalhinho (UPF)
Angel A. Juan (UOC)
Martín Goméz Ravetti (UFMG)
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SimHeuristics for SCM
►  Outline
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Supply Chain Management
Decision Problems in SCM
SimHeuristics
Applications
Conclusions
Future Research
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Supply Chain Management
Information flow
Warehouse
Inventory
Producción
Transportation
Transportation
Reverse logistics
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Supply Chain Management
►  “It
is the integration of key processes from
suppliers to final consumers in order to obtain
products, services and information that add
value for consumers and other
stakeholders” (The Global Supply Chain
Forum, 1998).
§  http://fisher.osu.edu/centers/scm
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SUPPLY CHAIN MANAGEMENT
Integrating and Managing Processes Across the Supply Chain
Information Flow
Tier 2
Supplier
Manufacturer
Tier 1
Supplier
Logistics
Purchasing
Production
PRODUCT FLOW
R&D
Supply Chain Business Processes
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Customer
Marketing & Sales
Consumer
/End-user
Finance
CUSTOMER RELATIONSHIP MANAGEMENT
CUSTOMER SERVICE MANAGEMENT
DEMAND MANAGEMENT
ORDER FULFILLMENT
MANUFACTURING FLOW MANAGEMENT
SUPPLIER RELATIONSHIP MANAGEMENT
PRODUCT DEVELOPMENT AND COMMERCIALIZATION
RETURNS
Source: Douglas M. Lambert, Martha C. Cooper, Janus D. Pagh, “Supply Chain Management: Implementation Issues and Research Opportunities,”
International Journal of Logistics Management, Vol. 9, No. 2, 1998, pp. 2.
Business Logistics ≠ SCM
►  The
objective of logistics manager is
§  Provide goods or services to the customer
according to their needs and requirements
Right Product
Right Place
+
+
Least Cost
+
+
Right time
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Objectives
►  Describe
the important role of uncertainty and
stochasticity in SCM optimization problems.
►  Point out that metaheuristics, and in particular
simheuristics, can play a decisive role in SCM
decision making process.
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Decision Problems in SCM
►  Strategic
problems
§  Cannot be easily changed in a short period
►  Combinatorial
optimization problems
§  The most frequent ones
►  Stochastic
data
§  Based on forecasted data
►  The
decisions have a great impact on the
performance (cost, customer service, etc.) of
the business.
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§  Integration, Collaboration, Cooperation
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Decision Problems in SCM
►  Supply
Chain Network Design
§  Location, Inventory, Distribution, Procurement
►  Manufacturing
and Resource Strategies
§  Resource utilization, production planning,
scheduling
►  Sustainability
and Green Strategies
§  Product design, manufacturing, returns
►  Transportation
and Distribution Strategies
§  Routing, assignment, coonnections
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SimHeuristics
►  Metaheuristics
have been extensive applied
to solve SCM problems with great success.
§  Griifis, Bell, Closs (2012), Metaheuristics in Logistics and Supply
Chain Management, Journal of Business Logistics 33:90-106.
►  Simheuristics
extends metaheuristics
capabilities through adding Simulation to
solve Stochastic problem.
§  Juan, Faulin, Grasman, Rabe, Figueira (2015), A review of
Simheuristics: extending metaheuristics to deal with stochastic
optimization problems, Operations Resaerch Perpective, 2:62-72
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SimILS
Real-Life System with
Uncertainty
Simplifying
Assumptions
Complex
DecisionMaking
Mathematical
Stochastic Model
SimILS
Mathematical
Deterministic Model
Simulation
ILS
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SimILS
►
SimILS framework extending the original ILS framework
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Applications
►  Network
Design Problem with marketing
strategies
§  Locations, warehouse assignment and
distributions strategies considering marketing
policies.
*  Ramalhinho, Pagés, Juan (work in process)
►  Stochastic
inventory-routing problem
§  Optimal routing and refill policy in a single period
§  Monte-Carlo Simulation with Multi-start
Randomized Clarke and Wright savings heuristic.
*  Juan, Grasman, Caceres, Bektas (2014)
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Conclusions
►  Supply
Chain Management is a important
topic for many companies today.
►  Many decisions in SCM must be taken within
an uncertainty environment.
►  Simheuristics can play an important role in
helping in decision making:
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Simple
Fast
Flexible
Accure
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Future Research
►  Foresee
more applications of simheuristics in
SCM problems
§  Network Design Problems with International
expansion, Logistics, Marketing Strategies
§  Collaborative transportation strategies in city
distribution
►  Main
reference
§  Ramalhinho H. and Goméz Ravetti M (2016), Supply Chain
Management in Handbook of Metaheuristics, editors M. Resende,
P. Pardalos, R. Martí.
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