Handbooks in Operations Research and Management Science, 11: Supply Chain Management: Design, Coordination and Operation

Edited By

  • A.G. de Kok, Eindhoven University of Technology, The Netherlands
  • S.C. Graves, M.I.T., Cambridge, USA

Supply Chain Management (SCM) has been a very visible and influential research topic in the field of operations research (OR) over the course of the last decade of the 20th century. The problems and experiences that emerged from business practices have stimulated many researchers to contribute to a deeper understanding about underlying phenomena and causal relationships. SCM has also served as an important application area for OR methods and techniques.

This handbook contains chapters covering a broad range of SCM issues written by leading experts in the field. The work is intended for researchers, students, engineers, economists and managers involved in SCM.

After the Introduction to SCM in Chapter 1 the Volume is divided into 3 parts.

Part I deals with Supply Chain Design. In Chapter 2, the optimal location of warehouses and factories is discussed as well as some tactical problems related to pricing and integrated production, inventory and transportation policies. In Chapter 3 various strategic and tactical issues that must be addressed when deciding on investments in inventory capital to hedge against uncertainty are discussed. Also, the issue of supplier selection in the context of the trade-off between supplier flexibility and variable material costs is discussed in detail. Chapter 4 provides an overview of the literature on flexibility in the context of Supply Chain Design. The literature review reveals that most of the flexibility concepts from the literature do not provide insight into the issue of allocation of assets across the supply chain, so that flexibility is created at the right links. A modelling framework is proposed that addresses this issue. Part I closes with Chapter 5, where the relationship between product and process design and Supply Chain Design is examined.

Part II deals with Supply Chain Coordination. In this context coordination refers to the design of contracts between suppliers and buyers, as well as the information that is exchanged between them. The different incentives of supplier and buyer are formalized in a game-theoretic context, showing that without proper incentive schemes the supply chain becomes inefficient in comparison to a supply chain with centralized control. Relatively simple models reveal fundamental insights on Supply Chain Coordination and already have had a great impact in the business practice of today. Chapter 6 focuses on contracts that allow for various kinds of transfer payments and identifies conditions under which such transfer payments yield a properly coordinated supply chain. In Chapter 7 the value of information exchange and sharing is studied. By comparing alternatives for sharing information between the links in the supply chain, we obtain insights about which information is most valuable and under what circumstances. The results from Chapters 6 and 7 provide input in terms of costs and prices, as well as available information, for the coordination of the supply chain. Still, many other parameters are required to execute the supply chain. Chapter 8 provides a framework for understanding the role of tactical planning parameters, such as forecast accuracy, mean and variance of lead times, and capacity utilization. They also emphasize the issue of the structural complexity of a supply chain. Real-world problems have such an enormous structural complexity that there is hardly any hope for solving them cleanly with a closed-form formula. Thus, alternative routes to cope with this complexity are proposed.

Part III is dedicated to Supply Chain Operations. Chapter 9 provides an overall Supply Chain Planning (SCP) framework. This framework shows the hierarchical nature of real-world Supply Chain Management and further reveals the structural complexity already discussed. The SCP framework provides the means to assess the state-of-the-art of Advanced Planning and Scheduling Systems. Chapter 10 discusses the progress made during the nineties with respect to the analysis of multi-echelon serial and divergent inventory systems. The fact that the structure of the optimal policy for divergent systems remains unknown, even for the most benign random demand processes, motivates the development and analysis of various control policies. Chapter 11 reports on the substantial progress made in this area and following up on Chapter 9 by discussing Supply Chain Operations Planning (SCOP) applied to arbitrary multi-echelon inventory systems, i.e. many-to-many relationships between items (links) to be controlled. A framework is proposed that enables the assessment of the feasibility of supply chain control concepts proposed in the literature and provide some quantitative results that reveal the counter-intuitive behaviours of such systems. Finally, Chapter 13 discusses the role of the logistics service providers for effective Supply Chain Management. A general framework (vocabulary) is presented for modelling a wide range of problems that arise when dealing with transportation optimisation under uncertainty in demand, pricing, etc. The models emerging from this framework are tackled with a generic method, called adaptive dynamic programming. The underlying idea is the concept of incomplete states and approximate value functions that allow for the development of approximation methods. Also addressed are issues of data quality that are relevant for all problems discussed in this volume.

View full description


Book information

  • Published: October 2003
  • Imprint: NORTH-HOLLAND
  • ISBN: 978-0-444-51328-1


...Twelve papers address how operations research can support decisions in the design, planning and operation of a supply chain.
Journal Economic Literature, 2004

...This handbook is a comprehensive review of research on supply chain management using operations research models and techniques, structured around the three themes of design, coordination and operations. ...This handbook is very comprehensive and well written, an invaluable resource for anyone interested in analytical models for supply chain management.
European Journal of Operational Research, 2005

Table of Contents

Preface. Introduction (S. Graves, T. de Kok). Part I: Supply Chain Design.Supply chain design and planning ? Applications of optimization techniques for strategic and tactical models (A. Muriel, D. Simchi-Levi). Safety stock placement, inventory hedges for buffering against demand and supply uncertainty (S. C. Graves, S. P. Willems). Supply chain design: Flexibility considerations (W. Bertrand). Design for postponement (J.M. Swaminathan, H.L. Lee). Part II: Supply Chain Coordination.Supply chain coordination with contracts (G. P. Cachon). Information sharing and supply chain coordination (F. Chen). Tactical planning models for supply chain management (J. M. Swaminathan, S. R. Tayur). Part III: Supply Chain Operations.Planning hierarchy, modeling and advanced planning systems (B. Fleischmann, H. Meyr). Supply chain operations: serial and distribution inventory systems (S. Axsäter).Supply chain operations: assemble-to-order systems (J.-S. Song, P. Zipkin). Planning supply chain operations: definition and comparison of planning concepts (T. G. de Kok, J. C. Fransoo). Dynamic models of transportation operations (W. B. Powell).