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.

Manpower Planning and Scheduling with Workforce Flexibility
J. Leung
In the global competition of supply-chains vs. supply-chains, swiftness in each value-added process is essential. Many time-critical steps involve rapid “servicing” of transportation equipment at consolidation hubs. This project focuses on crew-scheduling for such servicing to ensure rapid turnaround-times in the supply-chain. This job-assignment/scheduling problem is highly complex because of: the extremely tight time-windows for servicing, and large variety of equipment types, making matching appropriately-skilled crews to jobs difficult. The possibility of new operational modes - such as sharing of jobs by multiple crews to reduce service times - adds further complications.
We hope to extend our understanding of workforce flexibility in rostering/scheduling models. At the operational level, we will develop effective job-assignment and scheduling methods that allows job sharing. At the strategic level, we explore how cross-training and broader skill-sets of the crews impacts optimal schedule costs. In actual operations, unanticipated delays occur, so disruption recovery and redeployment of crews are necessary. This project will also investigate methods for stochastic planning and disruption recovery.
Results from this project may be relevant to many logistics businesses whose operations are time-critical. We hope our findings will contribute to the understanding of the value of resource flexibility.

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 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.

Understanding ERP System Adoption from a User’s Perspective
C.H. Cheng, W.M. Cheung, and J. Yeung
An ERP system is a new management technology that advocates an integrated approach to conduct business. While organizations are hoping to apply this technology to improve overall performance, they must understand what it takes for their employees to use it. Although the use of ERP systems may not be voluntary, the understanding of system adoption from the user’s perspective is useful in helping the organizations prepare their employees to face new challenges and learn how to make good use of the technology. To analyse factors affecting the ERP system usage, we proposed a conceptual model derived from the Triandis framework. The use of the Triandis framework is based on the previous research that documents the importance of social factors on the adoption of a technology. An empirical study was conducted in Hong Kong to understand the adoption process. Based on our findings, we also propose managerial implications in connection with usage promotion.