Item-Location Assignment to Responsiveness for Fulfilling Rush Demands in a Manufacturing Network

Abstract

Abstract-This study investigates the business impacts of sustainability and managerial insights in terms of the robustness of a logistics system. A mathematical optimization model and a distribution responsiveness index are developed in this paper. The index includes stocking distributiveness, transportation link diversity, and service level. The study identified a discontinuous relationship between costs and responsiveness through the operational decision of redistribution. Knowing this relationship will allow managers to determine the minimum investment to drive performance improvement and thus, make the best business-level decision at the appropriate moment. In a proper ratio of urgent to non-urgent, the advantage of item-reallocation will be emphasized if distribution responsiveness is better after its reallocation. After reallocation, the distribution center can achieve better distribution responsiveness with low inventory costs and total cost (R/C ratio). When transportation costs increase after item-reallocation, item-reallocation cannot obviously help the distribution center enhance responsiveness (R/C ratio). When fixed costs are low and facilities increase after item-reallocation, distribution responsiveness (R/C ratio) is likewise high regardless of item-reallocation. IndexTerms-Stocking item reshuffling (SIR), location-inventory network, Distribution network responsiveness. I. INTRODUCTION A. Motivation and Research OpportunityResponsiveness and operating costs are generally believed to contradict each other. A distribution center for fast delivery tends to significantly reduce inventory in each phase of the commodity circulation process as the cost and risk of goods on hand increases. Meanwhile, customers always ask for instant replenishment to supplies. A short lead time for order fulfillment is better; customers absolutely cannot tolerate shortage. To meet the requirement of retail terminals for replenishment, the distribution center must be capable of making fast delivery. Effective supply chain management can result in the rapid speed and elasticity in enterprises and reduce operating cost while improving the delivery promise capacity for customers. Conventional management strategies seek to address the uncertain requirements of customers by building distribution centers or enhancing the prepared inventory. Therefore, this strategy increases facility costs and the cost of inventories, eroding corporate profits. Unfortunately, increasing operating costs do not necessarily translate to any tangible improvement in performance. The relationship between operating costs and performance is nonlinear stepwise.Overall, increases in storage capacity and inventory at the end can improve the response ability to deliver. In contrast, centralized storage in a central warehouse can reduce the cost of inventories, and centralized delivery can reduce transportation cost. However, decision makers encounter difficulties in judging how costs increase based on a simple rule to enhance the performance of a supply cha...

Achieving Robustness and Eco-Efficiency in Sustainability for A Distribution Network

“…Constraint (4) suggests that total inventory and total demand should be balanced. Constraint (5) ensures that the allocated inventory in each DC is sufficient to fulfill retailer requirements and the allocation should be zero if the candidate DC is not selected.…”

“…[8] integrate lead time into a responsive supply chain as a cost-effective strategy for linking production and logistics. [5] argues that inventory item reallocation can enhance network efficiency and network responsiveness by at least 10%. However, the supply chain networks investigated by these models do not consider the robustness issue for item assignment in the network.…”