| 1. |
- Guajardo, Mario, et al.
(author)
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Joint optimization of pricing and planning decisions in divergent supply chain
- 2013
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In: International Transactions in Operational Research. - : Wiley-Blackwell. - 0969-6016 .- 1475-3995. ; 20:6, s. 889-916
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Journal article (peer-reviewed)abstract
- In divergent supply chains, such as in the oil industry, processing raw materials results in an outflow of multiple products. Final products are stored at international depots, from where they are ready to be shipped to the markets. Even if one company controls the entire chain, when production and sales organizations are decoupled, a relevant problem is to determine the internal prices of products at depots for achieving coordination. We propose an optimization model involving pricing and production decisions, and several constraints commonly used in divergent chains. In our approach, the producer incorporates the sellers behavior by expressing demand as a function of the internal price. As a result, our model serves as a coordination mechanism in trying to get an overall coordinated integrated solution in a decoupled reality. Numerical examples in single and multiple periods problems show the advantages of our approach over cost-based methods.
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| 2. |
- Guajardo, Mario, et al.
(author)
-
Speciality oils supply chain optimization: From a decoupled to an integrated planning approach
- 2013
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In: European Journal of Operational Research. - : Elsevier. - 0377-2217 .- 1872-6860. ; 229:2, s. 540-551
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Journal article (peer-reviewed)abstract
- We study a problem of tactical planning in a divergent supply chain. It involves decisions regarding production, inventory, internal transportation, sales and distribution to customers. The problem is motivated by the context of a company in the speciality oils industry. The overall objective at tactical level is to maximize contribution and, in order to achieve this, the planning has been divided into two separate problems. The first problem concerns sales where the final sales and distribution planning is decentralized to individual sellers. The second problem concerns production, transportation and inventory planning through refineries, hubs and depots and is managed centrally with the aim of minimizing costs. Due to this decoupling, the solution of the two problems needs to be coordinated in order to achieve the overall objective. In the company, this is pursued through an internal price system aiming at giving the sellers the incentives needed to align their decisions with the overall objective. We propose and discuss linear programming models for the decoupled and integrated planning problems. We present numerical examples to illustrate potential effects of integration and coordination and discuss the advantages and disadvantages of the integrated over the decoupled approach. While the total contribution is higher in the integrated approach, it has also been found that the sellers contribution can be considerably lower. Therefore, we also suggest contribution sharing rules to achieve a solution where both the company and the sellers attain a better outcome under the integrated planning.
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