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Research on Distribution System’s Service Capacity Based on Flexibility

3 March 2009 47 views One Comment

Abstract:

With the development of economics and technology, distribution systems (DS) have more diversified customers, increasingly complex services functions, increasing size of the scale and increasingly complicated structure. All this makes a modern DS face higher degree of uncertainties, and how to deal with these uncertainties become the important topics of DS management.Flexiblility, as an effective means of dealing with uncertainty, becomes the most important capability for a modern DS, especially for the Chinese enterprises or organizations engaged in the logistics and delivery industry. As we know, Chinese economy is now in a developing and changing stage and the logistics and distribution service markets is full of variables. Being with flexible capability, the enterprises or organizations can adopt more adaptable and more flexible strategy to become more agile and more competitive.Because of this, by using flexible theory, operation management theory and optimization theory, this dissatation studies the DS’s flexibile service capacity on two basic problems: the capacitie’s operational strategy and investment decision.The dissatation is divided into seven chapters and the main contents of every chapter are as follows:Chapter 1, introduction. This chapter introduces the dissatation’s background and significance, the ideas and the main contents of the paper.Chapter II, the basic theories introduction and literature review. To form the theoretical basis and for the follow-up section of the contents of reference, this chapter reviews three parts of the research areas: the relevant researches of flexibility researches on the general industry and logistics field, the relevant researches of logistics capabilities, the researches on the logistics and DS optimation decisions with quantitative method.Chapter III, the mechanism of DS’s flexible service capacity formation. This chapter first discusses the process of DS’s service capcity formation with the characteristics of the delivery activities that the formation relies on the system’s internal structure, and thus set up the three-level structure model of DS including organization’s layers, network layer and operational layer. Secondly, the chapter sets up the framework to discuss the types and characteristics of DS’s uncertainty, which including several aspects: the source of system uncertainty, the system structure’s influence on uncertainty, the controlling strategy of uncertainty and the evaluation of uncertainty. On this basis, this chapter discusses the mechanism of DS’s flexible service capacity forming, that the demand of the flexible capacity comes from the system’s uncertainty; the means to reality flexible capacity comes from the system’s three different levels; and different levels of flexible capacity combinates the comprehensive flexible service capabilities of the system, and ultimately reflects the value of flexible capacity.Chapter IV, the study on distribution center’s (DC) flexible service capacity. This chapter discusses the realization of flexible service capacity on the DS operational level, analyzes the operational strategy and the investment decision-making with the complementary of different types of capacities in a single DC with various uncertain demands. First, this chapter sets up the decision model for the capacity operation with fixed capacity. The result shows that the flexible capacity can be realized by the complementary of different types of capacities, and the value of flexibility has been related with the system’s uncertainty degree. If no uncertainty, there is no need for flexibility, and along with the increasing of the degree of uncertainty, flexible value is more obvious, thus proving that the flexibility has the characteristic of environment allocation. On this basis, this chapter establishes the general diversified capacity investment decision-making model based on flexibility, and analyzes the model with the typical situation that the DC has just two kinds of capacity (flexible and non-flexible). The result indicates that the presence of flexible makes the DC’s expect revenus increased, and changes the capacity investment decisions that the quantity of flexible capacity has been increased and the non-flexible’s has been decreased.Chapter V, the study on distribution network programming with flexibility. This chapter discusses the realization of flexible service capacity on the DS’s network layer and discusses how to program the distribution network when facing uncertainty. Different from the traditional research perspective, this topic focuses on the basic problem of distribution network programming, LAP, with the influence of flexibility. The chapter improves the traditional LAP to a two-stage stochastic programming model with recourse. SAA, a kind of simulation method, has been applied to solve an numerical example with the mode and the result proves the algorithm\’s effectiveness.Chapter VI, the DS’s capacity investment decisions with external flexible capacity. This chapter discusses the realizaition of DS’s flexible service capacity from the point of access to the capacity on the DS’s organization level.There are tow means to access flexible service capacity through the external capacity which are capacity purchasing and capacity sharing. This chapter first analyzes the impact of capacity purchasing to the DS’s investment decisions. The result shows that when demands are uncertainty, capacity purchasing really brings greater benefits to the DS with the increase in demand uncertainty, the greater the degree of improvement. The subscription of external capacity purchasing reflects the allocation of market risk between the DS and external capacity providers. If the subscriptin increasing, DS will take greater risks; otherwish DS will take less risk and access greater income. This chapter also analyzes the impact of external capacity sharing on DS’s investment decision-making based on flexible capacity collaboration. By building capacity investment decision-making model with two DS’s and through the theoretical analysis and numerical tests, the chapter gives the result that when demand is uncertain, external capacity collaborating can bring the two sides to increase revenue, and the coordination mechanism with sharing the collaborate revenue influences the capacity investment decision-making and the revenue of both sizes.Chapter VII, summary and outlook. The contents of this chapter include the paper’s summary and the forecast of follow-up researchess.Based on the flexible theory, the operation management theory and the optimization theory decisions of DS, with the characteristics of modern DS, the paper studies the DS’s flexible service capacity formation Mechanism and the optimize decision-making mechanism. Specifically, this paper contains the main content of the following aspects of the innovation:First of all, by setting up the conceptual model of DS’s flexible service capacity, the dissatation analyzes of the mechanism of flexible service capacity forming and provides a useful supplemen for the the flexibility study in logistics management field. There are lots of research works have been done by many scholars on the flexibility research of concept and connotation, but the researches on logistics and distribution management fields are not so rich. Based on the previous studies, the paper analyzes the concept of DS’s flexible service capacity, builds the concept modle of flexible service capacity, analyzes the types of uncertainty faced by DS and the constitutes of serive capacity based on DS’s structure, describes the mechanism of DS’s service capacity forming.Secondly, the paper discusses the capacity investment decision-making and flexible deployment strategies for a DC within the diversification of service capacity and gives the quantitative research tools for the problem. Through the establishment of stochastic programming model and simulation algorithm designing, this paper analyzes the influence of capacity flexible deployment strategies on the DS performance, and gives the indicators, flexible yield, for evaluating the flexiblility value. By the establishment of quantitative mathematical model, the paper analyzes the capacity investment decision-making with the flexible deployment strategy and discusses the different of decision-making under different condition with rigid or flexible capacity.Third, the paper improves the traditional LAP by combining the strategy of service re-allocation into the distribution center location decision and brings the means by using the SAA simulation method to solve the problem of a real case.Finally, through the establishment of the DS’s capacity investment decision-making model, this paper provides a quantitative research method to analyze the strategies of flexible service capacity realization by external capacity and discusses the different influence from the different strategies on desicions. Studying on the strategy of external capacity purchasing, the paper discusses the strategy of capacity purchasing and the decision of capacity investment with the condition of supscription. The result gives the criterion of whether or not to proceed with the procurement and discusses the impact of the strategy on the decision. Studying on the strategy of external capacity sharing, the paper presents the cooperation model of revenue sharing and discusses the influence of revenue proportion changing by the combination of analytical research and numerical simulation.

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One Comment »

  • Supply Chain Management India said:

    I read your post in abstract way. I really like this because in current situation this is a hot topic Distribution System’s.Your view point is true that flexibility is required in every area.

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