Logistics and Supply Chain Management


Hong Kong is one of the world’s logistics and supply chain management hubs, which expands to include non-industrial operations involving supply, distribution, transportation, communication and information handling, medical care and safety. According to The Association for Operations Management (APICS), nowadays supply chain management covers the design, planning, execution, control, and monitoring of supply chain activities with the objective of creating net value, building a competitive infrastructure, leveraging worldwide logistics, synchronizing supply with demand and measuring performance globally.

To increase the agility and flexibility of today’s complex business environment, systems engineers can process huge amounts of business data for decision-making, optimization, and effective execution along the supply chain networks. They possess professional knowledge in the design and control of these operational and information-rich systems, which require the use of many different kinds of scientific management methodologies.


Coordinated Decisions of Manufacturer/Distributor in a Fresh Product Supply Chain Involving Long Distance Transportation
X. Cai and Gang Yu
We consider a supply chain where a manufacturer produces a variety of fresh products to supply to a distributor in a distant export market. The manufacturer faces the risk that a fresh product may decay during the process of long distance transportation, in particular in the presence of uncertain events (such as bad weather, airport delays, etc.). The distributor faces the risk that the demand for a product is uncertain and any unsold fresh products may lose its value after the sales period. While the profit potential in supplying the products to the export market is substantial, a great challenge for both parties is how to minimize the loss involved. Because time is a crucial element for fresh products, proper decisions regarding the timing to produce, deliver, and sell, become particularly critical in these situations. Main topics to be investigated include modelling to capture the prominent characteristics and concerns in different scenarios, derivation and analysis of optimal policies, and design and analysis of information and profit sharing schemes.

Coordinating Inventory and Pricing Strategies under Total Minimum Commitment Contracts
X.T. Gong
Total minimum commitment (TMC) contracts are supply contracts under which the buyer commits to buying a minimum quantity/dollar value of products from the supplier during the contract horizon. TMC contracts have been widely implemented in many industries including electronics, aviation, and pharmaceuticals. Motivated by the observations that effective management of TMC contracts requires the coordination between inventory and demand management and that dynamic pricing is an effective tool to manage demand, this project aims to conduct an in-depth study on the coordination between inventory and pricing strategies under TMC contracts. If successful, our research output will not only significantly contribute to the literature by filling an important gap in the literature on TMC contracts, but also have a broad impact on practitioners by enhancing their capacities of effectively managing TMC contracts through inventory and pricing coordination

Pricing, Production and Delivery Decisions, and Cooperative Strategies in a Supply Chain with Products of Time-Varying Values
X. Cai and J. Chen
Many industries face the problem of manufacturing and selling products of time-varying values. Due to the time-varying nature of product values, determining the proper decisions and strategies regarding the best timing to offer new sales price, to place order, and to produce and deliver, is a great challenge for the manufacturer as well as the retailers involved in the supply chain. In this project we examine a supply chain with one manufacturer and multiple retailers, where the manufacturer wishes to determine a proper pricing mechanism and the corresponding production/delivery decisions, while the retailers wishes to make use of the pricing mechanism offered by the manufacturer, through possible grouping with each other to reach the needed purchase quantities for price drops. Cooperation and competition among the retailers, and between the manufacturer and the retailers, will be considered.


Resource Management Platform via Tracking Data Analysis in Hospital
C.H. Cheng and Dorbin Tobun Ng
When the whereabouts of medical resources and equipment can be tracked inside a hospital 24 hours and 7 days a week, the information about their activities associating with various treatment events and interactivities relating to different series of workflows can be used to answer questions such as how efficient these resources are utilized and whether additional resources should be acquired to improve the healthcare quality. The grounds for answering those questions come from analyzing the underlying voluminous tracking data and derived data showing the utilization of these resources. In particular, when different computed results such as clusters of different activity patterns match up with corresponding ward activities or events, decision making tool can then be developed to predict and prepare medical resources for dealing with the foreseeable events. This project aims to develop an analytic platform to turn simple but voluminous tracking data collected automatically in ward environment into knowledge for care providers to serve patients. Other than medical applications, this platform will be developed further to turn tracking data in large facilities like manufacturing factories and distribution centers for better logistics management.

The Dynamics of Layout in a Crossdock
C.H. Cheng and J. Leung
A fundamental problem in crossdocking operations is concerned with the arrangement of strip doors (where incoming freight is unloaded from a trailer) and stack doors (where outgoing freight is loaded onto a trailer), and the assignment of destinations to stack doors. This is referred to as the layout problem in a crossdock. To the best of our knowledge, most existing work only deals with the static problem in which the layout remains the same for the planning horizon. The static treatment provides good analytical implications. However, if facilities operate under a very dynamic environment, layout rearrangement may be required during the planning horizon to maintain layout effectiveness. In this project, we attempt to study the dynamics of layout in a crossdock. We address several research issues of crossdocking operations that have not received sufficient attention:
• Dynamic aspects with re-layout cost,
• Impacts of different material handling equipment,
• Interactions of layout, freight composition, and congestion.
This problem is particularly important for Hong Kong because of the high cost of land. Warehouse spaces and loading areas are severely limited in most distribution centre operations. As part of our work, we will develop models and solutions applicable to the Hong Kong situation.

The Impact of a Target on Newsvendor Decisions
Z.Y. Long
In this paper we investigate the impact of a target on newsvendor decisions. Different to the existing approach that maximizes the probability of the profit reaching the target, in this paper we model the effect of a target by maximizing the satisficing measure of a newsvendor’s profit with respect to that target. We study two satisficing measures: i) CVaR satisficing measure that evaluates the highest confidence level of CVaR achieving the target; and ii) Entropic satisficing measure that assesses the smallest risk tolerance level under which the certainty equivalent for exponential utility function achieves the target. For both satisficing measures, we find that the optimal ordering quantity increases with the target level. Further, the newsvendor orders more than the risk-neutral solution (over-order) sometimes and less than that (under-order) other times, depending on the target level. The more interesting finding is that if the target is proportional to the unit marginal profit and is also determined by only one other demand-related factor, then the newsvendor over-orders low-profit product and under-orders high-profit product.

Video Analytics for Resource Management
Kwong Tim Chan, C.H. Cheng, Dorbin Tobun Ng
In large transit facility like airport, warehouses, and distribution centers, a set of movable resources is circulating within the facility to help transport or temporarily store items going through it. For example, trolleys in an airport’s baggage reclaim hall will be fetched by passengers to carry their luggage to their choices of transportation leaving the airport. Such trolleys may be placed indoor and outdoor within the perimeter of the airport. With the fact that the CCTV visual coverage in a large facility increases over time, it is logical and economical to leverage existing CCTV infrastructure to help monitor and manage movableresources. In addition, queueing conditions in transit facility may affect or be affected by the availability of other resources. Queue performance monitoring is vital to ensure smooth transition. This project aims at using video content analytic techniques to help detect specific resources in order to achieve appropriate level of resource allocation throughout transit facility.
The project will carry out a series of pilot studies in the Hong Kong International Airport (HKIA) to measure the detection and counting capabilities of the R&D results. The first pilot study will be carried out in a relatively constant environment in Baggage Reclaim Hall to monitor number of available trolleys in trolley stations. Along with the detection module, a real-time alert system will be developed to take live CCTV feed and provide replenishment notice or alert to HKIA management and service providers to refill trolleys to appropriate trolley stations. The second pilot study will be carried out at the curbside trolley stations outside the Departure Hall where the environmental condition varies due to direct sun light at different time of the day or season as well as shadows from moving double-decker buses. The third pilot study will be at the trolley stations in the airside Departure West Hall (boarding gate areas). This pilot study is to demonstrate the extensibility of trainable object detector to detect and count trolleys of another form factor and shape under variable environmental conditions. The fourth pilot study is to demonstrate the capability to collect waiting time statistics in makeshift passenger queues in the Departure Hall. The video-based technologies developed in this project are applicable vertically to airports around the world, or horizontally to other CCTV-ready facilities like shopping malls and exhibition centers with indoor, outdoor, and mixed environment to monitor allocations of resources inside premises.