Designing a Closed-Loop Supply Chain Inventory Management System for a Plastic Recycling Company
MAGAZINE №1 (102) - 2021
AUTHORS
FEDOROVA T.V. - environmental projects specialist, «EcoTechnologies» (Moscow, Russia)
CATEGORY Green Logistics& Supply Chain Inventory management Return flows management (reverse logistics)
ABSTRACT
Over the past 70 years, the production of plastics worldwide has increased 215 times – from 1.5 million tons in 1950 to 322 million tons in 2015 [Darrin Qualman, 2017], and already in 2017, production volumes exceeded 400 million tons [UN Environment, 2018]. Plastics are produced from by-products of the oil and gas industry, primarily from associated petroleum gas. According to Plastics Europe – the European Association of Plastic Producers, between 4 and 6% of the oil produced is used for plastic production [Plastics Europe, 2017]. According to experts, this figure may reach 20% by 2050, due to the growing demand for plastic products, which increases the need for their production. Although renewable, the Earth's oil and gas reserves are limited, and they cannot be used forever to make new polymer products.
According to the report of the multinational company "BP" [BP, 2018], the world's oil reserves will last for 50.2 years, gas-for 52.8 years. In Russia, as one of the largest countries producing hydrocarbon raw materials, oil and gas reserves with existing exploration technologies will last for 25.8 and 55 years, respectively. At the same time, many products can be produced completely or partially without the use of polymers. In addition, plastic waste can be used as a secondary raw material, so that the demand for oil and gas processing products can be reduced.
Plastic waste produced by businesses and the public is a global problem [UN Environment, 2018] that threatens the health of people and the entire ecosystem of the Earth. At the same time, plastics take a very long time to decompose in the environment. For different types of plastic, these terms are in the range from 100 to 500 years. Plastic breaks down into small particles – microplastics that cannot be completely recycled by the ecosystem, such as paper or wood. This microplastic penetrates into the soil, as well as into water bodies and thus ends up in the stomachs of animals and fish. The United Nations estimates that every year 1 million seabirds, 100,000 marine mammals and turtles, as well as countless fish die from microplastics entering their bodies [Sustainable Development United Nations, 2017].
Damage to the ecosystem can be avoided if non-degradable waste is not allowed to enter the environment. To do this, the production cycle must be closed. Thus, many companies around the world began to move from linear supply chains to closed ones, in which return flow management or reverse logistics appeared. Therefore, the task of organizing work with plastic waste is quite relevant in scientific and practical terms.
Keywords:
Three-Leveled Model For Integrate Inventory Management in Supply Chains
MAGAZINE №2 (97) April 2020
AUTHORS ASLAKHANOV A.R., GERAMI V.D.
CATEGORY Inventory management Optimization and mathematical modelling Supply chain management
ABSTRACT
In the theory of inventory management, various models of inventory management are widely known. All of them are based on two fundamental factors: order size and the time between two adjacent deliveries. The variety of additional conditions (discounts depending on the size of the delivery lot, penalties due to deficits, the volume of safety stock, etc.) make the task of developing a working model to minimize total costs extremely difficult. It is another factor that looks interesting - the multi-level structure of reserves allocation.
In (Aslakhanov A.R., 2017; Lukinskiy V.V., Aslakhanov A.R., 2017), an integrated inventory management model was developed that would take into account deficit costs, randomness of demand and logistics cycles duration, as well as a predetermined planned level of end-user service. The model was developed for cases of two-level supply chains, which is a serious limitation for applying the model in practice.
In this paper, the model will be expanded for the case of a three-level linear supply chains in order to assess the scalability potential of the developed model for business situations and to assess the possibility of using the developed model in conjunction with reinforcement learning methods.
Keywords: inventory management Economic order quantity safety stock supply chain management total logistics costs
Comparative analysis of limited stock distribution principles in logistics network
MAGAZINE №6 (95) December 2019
AUTHORS ERMOLINA M.V., ZAKHODYAKIN G.V.
CATEGORY Information technologies in logistics and SCM Inventory management Simulation modelling
ABSTRACT
The article considers the situation when a company needs to distribute limited amount of stock to the regional warehouses in its own two-echelon distribution network. The network consists of a single distribution center and several regional facilities which are serving the company's customers. It is supposed that every warehouse calculates its requirements for the replenishment daily basing on the on-hand inventory, demand forecast, safety stocks and lead-times from the central warehouse. Thus, company's managers are aware of the consumption rate and inventory level at each regional facility. Demand forecasting and final replenishment planning decisions are centralized.
Notion of the "limited stock" refers to such inventory quantity at the central warehouse that is insufficient to satisfy the total volume of all regional warehouses' requirements for the product. Limited stock situation may have varying length in time.
A system of rationing rules or principles should be applied to make a distribution decision in such a situation. These set of rules identify the volume and sequence of the shipments from the central to regional warehouses.
So, in this article authors aim to solve the following problems:
- to identify factors that affect the choice of a certain set of rationing rules for the limited stock;
- to attempt to classify existing rationing principles;
- to identify how the business goals affect the choice of the preferred rationing principle;
- to create an imitation model and check experimentally which rationing principles are the best for each of the business goal
The outcomes gained might be used as a base for the choice of the limited stock rationing principles in companies with own distribution network, and for better tuning of the distribution algorithms in DRP systems or modules.
Keywords: inventory management imitation modeling simulation modeling simulation model inventory planning optimization stock rationing stock DRP
Inventory optimization factoring in deferred order payments and obtaining revenue delays at rental storage
MAGAZINE №6 (95) December 2019
AUTHORS BRODETSKIY G.L., SHIDLOVSKIY I.G.
CATEGORY Inventory management Optimization and mathematical modelling
ABSTRACT
The article presents a special modification of the EOQ-formula for the task of minimizing inventory management costs, for the model with rental storage, taking into account the specifics of the supply process. Modifications of special EOQ formulas for systems of the specified type were made directly for models important in the format of the corresponding business. These are systems for which a special concept of effective deliveries is introduced, when the specified delays for outgoing cash flows make it possible to pay for the order and the corresponding costs of the supply chain from the proceeds at the re-order interval. It will give managers the opportunity to find the optimal inventory management strategy if it is necessary to take into account the combined impact of a number of factors affecting decision-making procedures. We are talking about the need to consider the following factors: 1) the time value of money when cash flows of the analyzed supply chain are modeled; 2) the time delay granted to pay for the value of the delivered order; 3) pre-negotiated allowable for the duration of possible delays in the receipt of revenue from goods sold. The purpose of the article is to draw the attention of managers to existing (and still not used) opportunities to improve the efficiency of inventory management systems by taking into account these factors for a simulated supply chain and provide the appropriate tool as part of the task. The developed approach to inventory optimization while minimizing the costs of the supply chain, significantly will modify the EOQ – formula format to determine the size of the order. The optimal supply volumes taking into account the indicated modification, will become significantly smaller (in comparison with the traditional recommendations of the theory), which will favorably affect the value of working capital, the amount of capital frozen in stocks of goods, and the profitability of the supply chain itself. Formed restrictions on the allowable delay in revenue will determine the fulfillment of the conditions for the effectiveness of supply established in this article. In addition, the application of the developed model is presented on the example of a practical situation.
Keywords: inventory management time value of money deferred order payments revenue delay vehicle capacity vehicle cargo capacity
Simulation Modeling of a Multilevel Inventory Management System in Distribution Systems
MAGAZINE №5 (94) October 2019
AUTHORS VERKHOVSKAYA M.V., KONOTOPSKY V.Y., MENSHIKOVA E.V.
CATEGORY Simulation modelling Inventory management
ABSTRACT
The method of numerical simulation is used to study the effect of parameters of a simple discrete flow of inventory through a logistic three-level distribution system, as well as the parameters of the system itself, on the universal characteristics of its efficiency — relative levels of current stocks in the system and deficit indicators for end users. By flow parameters we mean the level of its power and its variation; under the system parameters - the type of applied inventory management (IM) model and the speed of reaction to the requirements for the supply of the next batch of inventory. The flow of consumer requirements arriving at the lower level of the system and causing inventory movement through the system corresponds to the Poisson law. Four basic ultrasound models IM are tested, and in each case the same model is used at all levels of the system. As a result, we obtained the corresponding number (total - 66, given in article - 22) of the experimental dependences and the regression equations adequate to them. Their brief interpretation is given from the point of economic aspects of distribution logistics. Conclusions are drawn regarding the nature of the use of the identified dependencies and the directions for further research on this issue. The study (its object and applied technologies) is not strictly tied to either a specific area of logistics (trade, industry, logistics services, etc.), or to the hierarchical level of the object of modeling (industry, distribution company, a single-plant enterprise, a production association, a large production unit, etc.).
Keywords: inventory management distribution systems multilevel distribution systems simulation simulation modelling integrated logistics material flow Stochastic efficiency assessment
Providing the Continuity of Main Production in Metallurgy Enterprises under Prepared Materials Supply
MAGAZINE №4 (93) August 2019
AUTHORS NEGOMEDZYANOV Y.A., NEGOMEDZYANOV G.Y.
CATEGORY Supply chain planning Optimization and mathematical modelling
ABSTRACT
The article discusses principles of providing a delivering the prepared materials to metallurgy enterprises for the continuity of the main production oriented to system-wide interests. The conditions for ensuring the continuity of the main production are revealed. It is shown that to perform its core work — reliable, efficient and continuous provision of technological units with prepared materials — functioning on the basis of a technological process interconnected with the main transport and main production, technologically optimal and logistically organized based on the approach to it as a process prepared materials should have an optimal operational stock of prepared materials. It has been determined that it is more expedient to maintain the operational stock of prepared materials in a warehouse on wheels from specialized cars than in bunkers of a calculated capacity. A mathematical model is proposed for optimizing the parameters for ensuring the continuity of the main metallurgical production. The results of the choice of parameters to ensure the continuity of the main production are given.
Keywords:
Justification of Service Policy Parameters for Spare Parts Supply Using Agent-based Simulation
MAGAZINE №3 (92) June 2019
AUTHORS
GOBEDZHISHVILI K.A. - Lecturer, Department of Information Systems and Technologies in Logistics, National Research University Higher School of Economics (Moscow, Russia)
ZAKHODYAKIN G.V. - Senior Lecturer, Department of Information Systems and Technologies in Logistics, National Research University Higher School of Economics (Moscow, Russia)
CATEGORY Logistics service management Simulation modelling Inventory management
ABSTRACT
Russian mining industry experiences a rapid growth providing an attractive market for suppliers of mining equipment. However, it is a customer-dominated market. The customers set stringent requirements for the initial equipment supply, as well as for the after-sale service and spare parts supply. The manufacturers of mining equipment are thus facing the need to rigorously analyze their supply chain, to develop a reasonable customer service policy and to adjust the supply chain to meet the requirements of the service policy. To fulfill the after-sale maintenance requirements, the manufacturers must stock spare parts within the supply chain and to design inventory control policies. This paper presents an agent-based simulation approach for estimation of the supply chain key performance indicators and to explore the service – cost trade-off. The conceptual model and the description of its implementation in Anylogic 8.4 software are provided. A case-study of a global mining equipment manufacturer's branch operating in Russia is described. The model is used to estimate the inventory
control policy parameters required to meet the target customer service level, to compare make-to-order against make-to-stock supply strategies, as well as to explore the service level – cost trade-off.
Keywords:
Making Management Decisions Caused by a Stock-Out
MAGAZINE №1 (90) February 2019
AUTHORS LUKINSKIY V.V., MAYEVSKIY A.G.
CATEGORY Optimization and mathematical modelling Inventory management
ABSTRACT
Stock-out – an inventory shortage, is a situation which periodically or constantly retailers, networks of retail trade (and other commercial organizations connected with replenishment and stocks expenditure) face worldwide. Numerous publications of foreign authors proposing practical solutions for such organizations is a vivid example of it. Some retail chain stores and enterprises even issue guidebooks to handle stock-out.
In domestic literature, there are publications describing various stock-out forms, as well as recommendations associated with the decision-making on them. Nevertheless, the experience connected with the prevention and struggle against the stock-out consequences is uncoordinated, lacks common structure, and sequence of actions. An enterprise facing stock-out receives only fragmentary data on the nature of this phenomenon, necessary instruments of influence and the sequence of actions.
To give an idea of the existing spectrum of analytical approaches and possible practical solutions, is one of the main objectives of this article. At the same time, issues related directly to determining the stock volume and other parameters of a company's inventory management system are considered. Based on the analysis of the issues described above, a possible algorithm of actions an organization can follow in the event of a stock-out, is presented. The possible development of an approach to manage the most complex stock-out case – «with a lost demand» is also considered.
Keywords:
Application of Cluster Analysis in Inventory and Assortment Management
MAGAZINE №6(89) December 2018
AUTHORS
MILOV A.S. - Bauman Moscow State Technical University (Moscow, Russia)
CATEGORY Analysis in logistics and SCM Inventory management Retail companies’ corporate logistics
ABSTRACT
The application of cluster analysis requires serious advance preparation of business processes of profit companies' trade networks. But the benefits appearing after its implementation are unique.
- There is the only practical opportunity to manage the assortment and improve the forecasting accuracy with the minimal availability of sales statistics on product stock keeping units or its total absence. This is especially true for both collector assortment with its annual rotation and new positions of traditional and seasonal assortment.
- Subject to prompt performance of management and forecasting tasks it is possible to run down to the level of maximum detailing for each point of trade network realization, (and (or) each customer) and each commodity stock keeping unit. At this level traditional methods of assortment management do not work because of the high speed of decision making.
- It becomes possible to automate the proposed processes in partnership with experts and neural network algorithm, for each realization place, which is an important task for trade networks for the purposes of «PSM technology». Taking into consideration a high level of processes detailing and traffic it is an extremely important achievement.
It became possible to create a unique assortment matrix for each point of purchase of goods (and (or) for each customer) and manage it online. This benefit allows to satisfy customers' demands better and, as a result, increase the financial flow of the company massively. Additional options of assortment management at the operational level have been received as a useful bonus
Keywords:
Calculation of the Optimum Moment of Delivery Considering Demand Uncertainty
MAGAZINE №5(88) October 2018
AUTHOR MASLOV S.E. - Commercial Director, Prodimeks Ltd. (Moscow, Russia)
CATEGORY Optimization and mathematical modelling Inventory management
ABSTRACT
The article presents the results of numerical calculations carried out on the basis of the inventory management model previously developed and investigated by the author, namely, the model for determining the optimal point of delivery, considering the uncertainty of demand. As a criterion of efficiency, a criterion for minimizing integral costs is considered, considering the costs of surplus stocks and the costs of the lack of goods in the warehouse. As a law of distribution of a random volume of demand, a triangular distribution is considered, as one of the most applicable under conditions of insufficient statistical data. The considered economic-mathematical model allows to optimize the moment of delivery provided that risks are minimized, based on the statistical data on the demand for the goods for the previous period, or if such data are not available - use expert estimates. These data are sufficient for constructing probability distribution for a random quantity of demand.
The model allows to determine, with occasional demand, the day of delivery of a new consignment of goods in a certain volume, provided that the risks are minimized. In the case of a triangular distribution this optimization problem has an analytic solution counted by the formula.
Keywords:
