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Models and Algorithms for Distribution Problems with Uncertain Demands

Author

Listed:
  • Raymond K.-M. Cheung

    (Department of Industrial and Manufacturing Systems Engineering, Iowa State University, Ames, Iowa 50011)

  • Warren B. Powell

    (Department of Civil Engineering and Operations Research, Princeton University, Princeton, New Jersey 08544)

Abstract

We consider the problem of distributing goods from one or more plants through a set of warehouses in anticipation of forecasted customer demands. Two results are provided in this paper. First, we present a methodology for approximating stochastic distribution problems that are computationally tractable for problems of realistic size. Comparisons are made to standard deterministic formulations and shown to give superior results. Then, we compare logistics networks with varying degrees of redundancy represented by the number of warehouses which serve each customer. Overlapping service regions for warehouses provides additional flexibility to handle real-time demands. We quantify the expected savings that might result from such strategies.

Suggested Citation

  • Raymond K.-M. Cheung & Warren B. Powell, 1996. "Models and Algorithms for Distribution Problems with Uncertain Demands," Transportation Science, INFORMS, vol. 30(1), pages 43-59, February.
    • Handle: RePEc:inm:ortrsc:v:30:y:1996:i:1:p:43-59
    DOI: 10.1287/trsc.30.1.43
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    Cited by:

    1. Mizgier, Kamil J. & Wagner, Stephan M. & Holyst, Janusz A., 2012. "Modeling defaults of companies in multi-stage supply chain networks," International Journal of Production Economics, Elsevier, vol. 135(1), pages 14-23.
    2. Shangyao Yan & Ching-Hui Tang, 2008. "An Integrated Framework for Intercity Bus Scheduling Under Stochastic Bus Travel Times," Transportation Science, INFORMS, vol. 42(3), pages 318-335, August.
    3. Yan, Shangyao & Tang, Ching-Hui, 2009. "Inter-city bus scheduling under variable market share and uncertain market demands," Omega, Elsevier, vol. 37(1), pages 178-192, February.
    4. Santoso, Tjendera & Ahmed, Shabbir & Goetschalckx, Marc & Shapiro, Alexander, 2005. "A stochastic programming approach for supply chain network design under uncertainty," European Journal of Operational Research, Elsevier, vol. 167(1), pages 96-115, November.
    5. Huseyin Topaloglu & Sumit Kunnumkal, 2006. "Approximate dynamic programming methods for an inventory allocation problem under uncertainty," Naval Research Logistics (NRL), John Wiley & Sons, vol. 53(8), pages 822-841, December.
    6. C A Poojari & C Lucas & G Mitra, 2008. "Robust solutions and risk measures for a supply chain planning problem under uncertainty," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 59(1), pages 2-12, January.
    7. Haiqing Song & Vernon N. Hsu & Raymond K. Cheung, 2008. "Distribution Coordination Between Suppliers and Customers with a Consolidation Center," Operations Research, INFORMS, vol. 56(5), pages 1264-1277, October.
    8. Yan, Shangyao & Tang, Ching-Hui, 2007. "A heuristic approach for airport gate assignments for stochastic flight delays," European Journal of Operational Research, Elsevier, vol. 180(2), pages 547-567, July.
    9. Leung, Stephen C.H. & Tsang, Sally O.S. & Ng, W.L. & Wu, Yue, 2007. "A robust optimization model for multi-site production planning problem in an uncertain environment," European Journal of Operational Research, Elsevier, vol. 181(1), pages 224-238, August.
    10. S C H Leung & K K Lai & W-L Ng & Y Wu, 2007. "A robust optimization model for production planning of perishable products," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 58(4), pages 413-422, April.
    11. Shangyao Yan & Fei-Yen Hsiao & Yi-Chun Chen, 2015. "Inter-School Bus Scheduling Under Stochastic Travel Times," Networks and Spatial Economics, Springer, vol. 15(4), pages 1049-1074, December.
    12. Francesca Maggioni & Florian A. Potra & Marida Bertocchi, 2017. "A scenario-based framework for supply planning under uncertainty: stochastic programming versus robust optimization approaches," Computational Management Science, Springer, vol. 14(1), pages 5-44, January.
    13. Diabat, Ali & Al-Salem, Mohammed, 2015. "An integrated supply chain problem with environmental considerations," International Journal of Production Economics, Elsevier, vol. 164(C), pages 330-338.

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