Logistics and Supply Chain Management

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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.

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.