Showing papers in "Omega-international Journal of Management Science in 2003"
TL;DR: In this article, the authors consider single-level lot sizing problems, their variants and solution approaches, together with exact and heuristic approaches for their solution, and conclude with some suggestions for future research.
Abstract: Lot sizing is one of the most important and also one of the most difficult problems in production planning. This subject has been studied extensively in the literature. In this article, we consider single-level lot sizing problems, their variants and solution approaches. After introducing factors affecting formulation and the complexity of production planning problems, and introducing different variants of lot sizing and scheduling problems, we discuss single-level lot sizing problems, together with exact and heuristic approaches for their solution. We conclude with some suggestions for future research.
670 citations
TL;DR: The results show that attitudinal and social factors rather than perceived behavioral control factors play a significant role in influencing intentions to adopt a WAP-enabled mobile phone.
Abstract: This paper examines the attitudinal, social and perceived behavior control factors that are associated with the adoption of WAP-enabled mobile phones among Internet users. An online questionnaire is used to gather data. The results show that attitudinal and social factors rather than perceived behavioral control factors play a significant role in influencing intentions to adopt a WAP-enabled mobile phone. In particular, perceptions of relative advantage, risk, and image are found to influence adoption intentions. In addition, reference groups too play an important role in shaping adoption intentions. Implications of results and directions for future research are examined.
564 citations
TL;DR: A typology for the analysis of network systems resulting in four basic network configurations is presented and can be used as a foundation for further research in the context of integrating manufacturing network and supply chain theory.
Abstract: The purpose of this paper is to analyze manufacturing networks and supply chains from an operations strategy perspective. These two areas have traditionally been treated as separate research tracks, but with the ongoing globalization of markets and operations there is a need to integrate these complementary disciplines to study networks of facilities. In this paper we examine the two research areas based on two structural decision categories in an operations strategy, viz. facilities and vertical integration. We present a typology for the analysis of network systems resulting in four basic network configurations. Coordination of activities within the network is contingent upon the configuration, thus resulting in four coordination approaches. The configuration and coordination analyzes can be used as a foundation for further research in the context of integrating manufacturing network and supply chain theory.
359 citations
TL;DR: In this paper, a series of case studies and an extensive survey of companies ranging in size from a few million dollars in annual revenues to over a hundred billion dollars are included in this study.
Abstract: Enterprise Resource Planning (ERP) systems have experienced a phenomenal growth in the last 5 years and at present they are pervasive in the US manufacturing sector. This paper describes an attempt to chronicle this phenomenon through a series of case studies and an extensive survey. Manufacturing companies ranging in size from a few million dollars in annual revenues to over a hundred billion dollars are included in this study. The key finding from this study is that companies of different sizes approach ERP implementations differently across a range of issues. Also, the benefits differ by company size. Larger companies report improvements in financial measures whereas smaller companies report better performance in manufacturing and logistics.
343 citations
TL;DR: In this paper, the authors present a decision support system that can be used to design balanced supply chain ordering decisions and clearly shows how the bullwhip effect can be reduced, at the expense of increased inventory recovery times.
Abstract: The Bullwhip Problem in supply chains is first outlined. A discrete control theory model of a generic model of a replenishment rule is presented. From this model, an analytical expression for bullwhip is derived that is directly equivalent to the common statistical measure often used in simulation, statistical and empirical studies to quantify the bullwhip effect. This analytical expression clearly shows that bullwhip can be reduced by taking a fraction of the error in the inventory position and pipeline position, rather then account for all of the errors every time an ordering decision is made as is common in many scheduling systems. Furthermore, increasing the average age of the forecast reduces bullwhip, as does reducing the production lead-time. Next an analytical expression for the variance of the inventory position is derived and used together with the bullwhip expression to determine suitable ordering system designs that minimise both bullwhip and inventory variance for a range of weightings between the two variances. The relationship between our Bullwhip metric and the control theory metric Noise Bandwidth is highlighted. This contribution then derives and exploits an analytical expression for the Integral of Time * Absolute Error (ITAE) criterion often used to quantify inventory responsiveness in response to a deterministic demand. The results form a Decision Support System that can be used to design balanced supply chain ordering decisions and clearly shows how the Bullwhip Effect can be reduced, at the expense of increased inventory recovery times. Thus, this paper presents the general solution to the bullwhip problem on a sound mathematical basis.
340 citations
TL;DR: In this article, the authors compared the performance of multiple discriminant analysis (MDA) and neural networks in identifying potential loan and found that the neural network models consistently perform better than the MDA models in detecting potential problem loans.
Abstract: A number of credit-scoring models that accurately classify consumer loan applications have been developed to aid traditional judgmental methods This study compares the performance of multiple discriminant analysis (MDA) and neural networks in identifying potential loan The neural network models consistently perform better than the MDA models in identifying potential problem loans To alleviate the problem of bias in the training set and to examine the robustness of neural network classifiers in identifying problem loans, we cross-validate our results through seven different samples of the data
256 citations
TL;DR: This paper will demonstrate via the statistical analysis of 32 industrial case studies that the route to this desired fully integrated, effective supply chain is long established.
Abstract: Many organisations are evaluating their supply chains because they are perceived to be an area for both cost cutting and increasing competitiveness. The objective is apparently very simple; optimise the supply chain via effective and efficient operating practices. This paper will demonstrate via the statistical analysis of 32 industrial case studies that the route to this desired fully integrated, effective supply chain is long established. The solution has been renamed, repackaged and adapted many times over the years, but what remains constant are the underlying principles of simplified material flow. The output of this paper includes the vision, design principles, and rules for action needed to enable effective supply chain integration.
244 citations
TL;DR: In this article, the authors extended the context-dependent DEA by incorporating value judgment into the attractiveness and progress measures, and applied the method to measuring the attractiveness of 32 computer printers.
Abstract: Data envelopment analysis (DEA) is a methodology for identifying the efficient frontier of decision making units (DMUs). Context-dependent DEA refers to a DEA approach where a set of DMUs are evaluated against a particular evaluation context. Each evaluation context represents an efficient frontier composed by DMUs in a specific performance level. The context-dependent DEA measures (i) the attractiveness when DMUs exhibiting poorer performance are chosen as the evaluation context, and (ii) the progress when DMUs exhibiting better performance are chosen as the evaluation context. The current paper extends the context-dependent DEA by incorporating value judgment into the attractiveness and progress measures. The method is applied to measuring the attractiveness of 32 computer printers. It is shown that the attractive measure helps (i) customers to select the best option, and (ii) printer manufacturers to identify the potential competitors.
226 citations
TL;DR: In this article, the authors report on perceived TQM success for a cohort of 109 firms over a 5-year period, and show that the success of TQMs is associated with the time since adoption, the nature of the customer base and the holding of ISO9000 series certification.
Abstract: This is one of a very few longitudinal research studies of the link between TQM implementation and successful outcomes. The paper reports on perceived TQM success for a cohort of 109 firms over a 5-year period. Some 42 firms, predominantly small in size, had discontinued with TQM, while the remaining 67 firms reported varying degrees of success. The data suggests that the size of firm, the nature of the customer base and the holding of ISO9000 series certification has had no significant effect on TQM outcomes for this cohort. The research has also highlighted some necessary antecedents for TQM success. In particular, managers need to understand the nature and purpose of TQM, its relationship to ISO9000, and the potential benefits that can accrue from its implementation. We have shown that these factors are significantly associated with perceived TQM success. They are also significant for the discontinuing firms. Deriving success from TQM has also been shown to be significantly associated with (i) the time since adoption, (ii) the inclusion of quality objectives in the strategic planning process, and (iii) the need for senior managers to take charge of TQM and to ensure that the majority of employees are involved in its implementation. While these findings are supportive of such assertions in the literature, this paper provides further robust empirical evidence from a cross-section of UK companies in a longitudinal research design. This research has also contributed to the debate about the effects of firm size and ISO9000 certification. The paper concludes by proposing the next phase of analysis of these firms, based on five additional performance variables collected during both studies of the cohort.
212 citations
TL;DR: In this article, the authors proposed a heuristic for mean/total flowtime minimization in permutation flow shops, which exploits the idea of optimising partial schedules, already present in the NEH-heuristic (Omega 11 (1983) 91) with respect to makespan minimisation.
Abstract: In this paper, we propose a heuristic for mean/total flowtime minimisation in permutation flow shops. The heuristic exploits the idea of ‘optimising’ partial schedules, already present in the NEH-heuristic (Omega 11 (1983) 91) with respect to makespan minimisation. We compare the proposed heuristic against the ones by Rajendran and Ziegler (Eur. J. Oper. Res. 32 (1994) 2541), and Woo and Yim (Comput. Oper. Res. 25 (1998) 175), which are considered the best constructive heuristics for flowtime minimisation so far. The computational experiments carried out show that our proposal outperforms both heuristics with respect to the quality of the solutions. Moreover, our heuristic can be embedded in an improvement scheme to build a composite heuristic in the manner suggested by Allahverdi and Aldowaisan (Int. J. Prod. Econom. 77 (2002) 71) for the flowtime minimisation problem. The so-constructed composite heuristic also improves the best results obtained by the original composite heuristics by Allahverdi and Aldowaisan.
203 citations
TL;DR: In this article, the authors investigate the concept of productivity in retailing, and define the output of a retail firm as a set of explicitly priced market goods accompanied by distribution services that are implicitly priced.
Abstract: We investigate the concept of productivity in retailing. In the literature, there are unresolved issues concerning the construct of retail output and measurement methodologies. In accordance with recently developed theory, we define the output of the retail firm as a set of explicitly priced market goods accompanied by distribution services that are implicitly priced. We operationalise these services, and measure productivity of a chain of grocery stores using data envelopment analysis. We also find evidence of increasing returns to scale. Managerial implications of the findings are provided.
TL;DR: In this paper, the authors focus on the consumer decision process in the context of the online shopping environment in Singapore and find that perceived risk has a negative relationship with consumers' overall evaluation of the deal and overall evaluation has a positive relationship with their willingness to buy online.
Abstract: This research focuses on the consumer decision process in the context of the online shopping environment in Singapore. An Internet survey was implemented and 1133 responses were received. Using structural equation modeling, our findings show that perceived risk has a negative relationship with consumers’ overall evaluation of the deal, and overall evaluation of the deal has a positive relationship with consumers’ willingness to buy online. In addition, there is a positive relationship between perceived benefits of search and overall deal evaluation. The implications of the above results are discussed and suggestions for future research are also proposed.
TL;DR: In this article, a theoretical model is developed to address the lack of specific research and theory concerning stress and resilience in the information system field as specified by Thong and Yap (Omega 28 (2000) 681).
Abstract: The literature on individual and organizational resilience is reviewed. A theoretical model is developed to address the lack of specific research and theory concerning stress and resilience in the information system field as specified by Thong and Yap (Omega 28 (2000) 681). Specifically, in order to understand organizational resilience in the information system field, the proposed model integrates approaches that specify both individual and organizational levels of response. Organizational structures and processes and extra-organizational factors illustrate potential sources of protection and vulnerabilities to stress on the organizational level. On the individual level proximal chronic stressors of situational demands, constraints, and deficient resources are coupled with individual differences such as dispositions, personality, values, and skills that an individual may call upon during exposure to a stressful event. After the model is elaborated, brief research findings are offered as initial support for the model on the individual level. Implications of the framework for information system practice and future research are discussed.
TL;DR: In this paper, the authors examined a special class of freight consolidation at an integrated global logistics company in GSC and developed a mathematical programming model to assist the evaluation of consolidation policies.
Abstract: The collaborative integration with global third party logistics (3PL) to execute physical distribution dictates the success of any global supply chain (GSC) application. In an overall effort to minimize the system-wide cost, global 3PL can apply various consolidation policies to maximize the utilization of expensive transportation such as aircraft. Freight consolidation has received considerable attention in recent years, but the application of consolidation policies by integrated global 3PL under an e-business model is rarely discussed. The emergence of mass customization has challenged integrated logistics providers to adjust their consolidation policies in order to simultaneously minimize the cost and fulfill the service commitments. This paper examines a special class of freight consolidation at an integrated global logistics company in GSC. A mathematical programming model has been developed to assist the evaluation of consolidation policies. The computational results reveal a substantial cost saving and a service level improvement of about 20% as a consequence of implementing a collaborative consolidation policy.
TL;DR: In this paper, the authors examine the problem of how to establish an incentive scheme to furnish reliable and truthful information in supply chains and illustrate how a tendency towards true information providing can be constituted in Supply Chains and will be endorsed in the long run.
Abstract: This paper examines the problem of how to establish an incentive scheme to furnish reliable and truthful information in Supply Chains. In the current discussion information is typically assumed to be perfect and Supply Chain Partners are presumed to behave altruistically. In our judgement these assumptions are far from realistic. In consequence we assume that opportunistic behavior can emerge and will be accompanied by incomplete and falsified information. Presenting an incentive scheme, we illustrate how a tendency towards true information providing can be constituted in Supply Chains and will be endorsed in the long run. The most important result of this approach is that a substantial change in the information policy of Supply Chains is brought about and a higher level of quality is obtained.
TL;DR: Large differences in forecast error rates are found between firms identified as primary users of either judgmental or quantitative forecasting methods, with users of quantitative methods significantly outperforming users of judgmental methods.
Abstract: In an era where forecasts drive entire supply chains forecasting is seen as an increasingly critical organizational capability. However, business forecasting continues to rely on judgmental methods despite large advancements in information technology and quantitative method capability, prompting calls for research to help understand the reasons behind this practice. Our study is designed to contribute to this knowledge by profiling differences between firms identified as primary users of either judgmental or quantitative forecasting methods. Relying on survey data from 240 firms we statistically analyzed differences between these categories of users based on a range of organizational and forecasting issues. Our study finds large differences in forecast error rates between the two groups, with users of quantitative methods significantly outperforming users of judgmental methods. The former are found to be equally prevalent regardless of industry, firm size, and product positioning strategy, documenting the benefits of quantitative method use in a variety of settings. By contrast, the latter are found to have significantly lower access to quantifiable data and to use information and technology to a lesser degree.
TL;DR: A cognitive mapping based methodology and system is described and demonstrated that eliminates the merging problem, supports data collection, and provides data analyses to uncover both individual and collective cognitive maps.
Abstract: Organizations would like to capture and merge the perceptions of key individuals into an organizational memory. Various cognitive mapping approaches have been used to identify and capture these perceptions. However, merging the cognitive maps of individuals into a collective cognitive map to represent the shared perceptions has been problematic. Due to the merging problems, the creation of collective cognitive maps is impractical for many organizational situations. In this paper, we describe and demonstrate a cognitive mapping based methodology and system that eliminates the merging problem, supports data collection, and provides data analyses to uncover both individual and collective cognitive maps.
TL;DR: The fixed-charge transportation problem (FCTP) is an extension of the classical transportation problem in which a fixed cost is incurred, independent of the amount transported, along with a variable cost that is proportional to the amount shipped as discussed by the authors.
Abstract: The fixed-charge transportation problem (FCTP) is an extension of the classical transportation problem in which a fixed cost is incurred, independent of the amount transported, along with a variable cost that is proportional to the amount shipped The introduction of fixed costs in addition to variable costs results in the objective function being a step function Therefore, fixed-charge problems are usually solved using sophisticated analytical or computer software This paper deviates from that approach It presents a simple heuristic algorithm for the solution of small fixed-charge problems We present numerical examples to illustrate applications of the proposed method
TL;DR: The viability of HAS as an effective procedure for hotel selection has been ascertained by the positive feedback obtained from the survey questionnaires and support the contention that HAS performs its functions as expected.
Abstract: In this paper, we describe the research and development of a fuzzy expert system for hotel selection. A prototype system, called hotel advisory system (HAS), has been designed and developed to assist tourists in conducting hotel selection using fuzzy logic. HAS is implemented on personal computers under a Microsoft WindowsTM environment. To evaluate the performance of HAS, selected practitioners in the Hong Kong hotel industry and potential users from twelve nations were invited to participate in testing the system. The potential users and hotel experts rated highly on the effectiveness and the usability of the system. The results of the prototype evaluation were satisfactory and support the contention that HAS performs its functions as expected. The viability of HAS as an effective procedure for hotel selection has been ascertained by the positive feedback obtained from the survey questionnaires. Using HAS makes hotel selection simple because it can incorporate the linguistic terms which are normally produced by tourists.
TL;DR: In this article, the authors explore the quality initiatives of various industries and examine the links between quality management implementation and quality outcomes and find that significant contrast exists between public utilities/service industries and manufacturing/construction industries, with the former group having a higher level of quality management implementing and achieving better quality outcomes.
Abstract: This paper sets out to explore the quality initiatives of various industries and examine the links between quality management implementation and quality outcomes. We use the scenario in Hong Kong as a first step in addressing these research inquiries. Using Black and Porter's instrument (Decision Sci. 27 (1996) 1) and the various perceived performance measures representing quality management implementation and quality outcomes respectively, we conducted a mail survey to collect data from over 1000 companies with operational quality management systems and received 304 valid responses for data analysis. Analysis of variance (ANOVA) was used to analyze the data and the results are consistent with our prediction that the differences in quality initiatives by industry types affect the levels of quality management implementation and quality outcomes in different industries. In particular, we found that significant contrast exists between public utilities/service industries and manufacturing/construction industries, with the former group having a higher level of quality management implementation and achieving better quality outcomes. The emphases that they placed on their quality management implementation also seem to differ. Implications of the results are discussed and suggestions for further research on quality management and implementation are offerred.
TL;DR: In this article, the authors argue real option value is often only vaguely defined at the adoption stage and frequently manifest during implementation, and highlight the need to consider changes to strategic value as companies adapt to setbacks that arise during project implementation.
Abstract: Strategic investments such as flexible manufacturing technology yield benefits to a company beyond the immediate cash flows. These strategic benefits can be captured, to some degree, using real option valuation techniques. However, real option models presume these can be identified and evaluated at an early stage in the investment process. In this paper, the authors argue real option value is often only vaguely defined at the adoption stage and frequently manifest during implementation. By examining four advanced manufacturing technology investments during implementation within different organizations, this study qualitatively explores the changes to original real options as unanticipated problems surface and solutions are found and implemented. The study found that as the companies adapted to implementation setbacks, the form, scale, value and clarity of the real options changed. For three of the companies, the changes to options were negative while the fourth case indicated positive effects. Most prevalent were delays in the earliest possible exercise date. The results highlight the need to consider changes to strategic value as companies adapt to setbacks that arise during project implementation. Implications for the evaluation of such projects are discussed.
TL;DR: This paper attempts to examine the models purporting to study the fundamental question of effective use of technology, and summarizes and meta-analyzed models examining the technology-performance relationship to provide a more integrated perspective of technology and the factors that interact with it to enhance performance at the individual, process, or organizational level.
Abstract: The effective deployment of technology within an organizational context is of integral concern to fields associated with the management sciences. While there has been significant study of technology effectiveness, it is often piece-meal as diverse models are hypothesized and empirically tested. This paper attempts to examine the models purporting to study the fundamental question of effective use of technology. Models examining the technology-performance relationship are summarized and meta-analyzed in an attempt to provide a more integrated perspective of technology and the factors that interact with it to enhance performance at the individual, process, or organizational level. The models are evaluated on their common dimensions, and insights for further research are identified. A research plan, along with a research model, is proposed with the hope of facilitating future work in this area of imminent and growing importance.
TL;DR: In this article, a field study is conducted to investigate the actual implementation experiences of a selected group of service and manufacturing users of JIT, finding that firms that had engaged in modifications such as operator and management training and improving linkages with suppliers prior to implementing their JIT systems experienced less implementation problems and achieved higher levels of success.
Abstract: This study investigates JIT implementation practices and performance in manufacturing and service organizations in the US. Literature related to JIT usage and performance in both sectors is reviewed. A field study is then conducted to investigate the actual implementation experiences of a selected group of service and manufacturing users of JIT. Our findings from the literature and the field study are used to develop four research hypotheses that are tested using survey data from 130 manufacturing and 61 service firms. Manufacturing and service firms that had engaged in modifications such as operator and management training and improving linkages with suppliers prior to implementing their JIT systems experienced less implementation problems and achieved higher levels of success than firms that placed less emphasis on these modifications. This paper details and discusses these and other results from our study. In addition, managerial implications of our findings are presented.
TL;DR: In this article, the authors developed an inventory model for products experiencing continuous decrease in unit price and developed an accurate closed-form approximate solution to the model, which indicated that declining prices lead to substantial decrease in the optimal cycle time and much frequent ordering.
Abstract: An important characteristic of high-tech industries is decreasing component prices over time. In the personal computer industry, some component prices decline at a rate of 1% per week. This paper develops an inventory model for products experiencing continuous decrease in unit price. We develop an accurate closed-form approximate solution to the model. Our results indicate that declining prices lead to substantial decrease in the optimal cycle time and much frequent ordering. This explains the heavy emphasis on just-in-time inventory management practiced by successful companies in high-tech industries. While previous models attributed the success of just-in-time policies to reduced holding cost and improved quality, under declining prices a substantial source of savings becomes lower costs of raw materials which is significant part of cost in these industries. We illustrate the results of the model with a numerical example and perform sensitivity analysis.
TL;DR: A goal programming model for determining constrained regression estimates of attribute weights is developed using pair-wise comparison ratings that are derived by using triads of the attributes.
Abstract: Group decisions are an important element of successful knowledge management in organizations. Such decisions are difficult to make, however, especially when they involve a large set of attributes that require decision-makers to develop rankings. This paper presents a goal programming model for determining constrained regression estimates of attribute weights. The model is developed using pair-wise comparison ratings that are derived by using triads of the attributes. In addition, metrics are presented for measuring individual and group consensus. A specific application to the health care industry is presented to illustrate results that are obtained from the model.
TL;DR: In this article, a single-product distribution channel where a supplier manufactures items of a given type, some of which are defective, that are sold by a retailer who only detects a subset of the defective items, passing the rest along to customers is studied.
Abstract: This paper studies a single-product distribution channel where a supplier manufactures items of a given type, some of which are defective, that are sold by a retailer who only detects a subset of the defective items, passing the rest along to customers. We conjecture the structure of the demand and cost functions, assuming customers to have a decreasing marginal aversion to bad quality while both the supplier and the retailer make marginally increasing efforts to avoid bad quality. This allows us to deduce several implicit parameters of a cost model based on observable data, such as the share of the channel margin. Once the parameters of the model are available, we analyze the result of vertical integration. Although we confirm the well-known fact that vertical integration improves the quality perceived by the customer, we characterize the supplier's decision of whether or not to provide a better quality in terms of the individual channel margins. As an alternative, we derive the conditions under which the supplier and the retailer may devise a mutually beneficial transfer contract that simultaneously increases their profit and improves quality.
TL;DR: In this paper, the authors used data collected from manufacturing firms in Ghana to demonstrate that in an emerging economy concerns about the competitive hostility is the factor with the strongest influence on manufacturing strategy choice.
Abstract: Manufacturing strategy represents the way a firm plans to deploy its manufacturing resources and to use its manufacturing capability to achieve its goals. Recent research has pointed out the important role of the business environment on the manufacturing strategy choices by organizations. However, most of the research has been confined to well-developed economies. This paper extends the research on business environment and manufacturing strategy by presenting results from an emerging economy. Using data collected from manufacturing firms in Ghana we demonstrate that in an emerging economy concerns about the competitive hostility is the factor with the strongest influence on manufacturing strategy choice.
TL;DR: The mechanism used herein to incorporate expert knowledge within the DEA framework is to first apply a discriminant or classification tool, to quantify the functional relation that best captures the expert's mental model for performance.
Abstract: This paper presents an improved measurement tool for evaluating performance of branches within a major Canadian bank. While there have been numerous previous studies of performance in the banking industry, particularly at the branch level, this study is different in a very significant way: specifically two kinds of data are used to develop the model. The first type of data is that related to standard transactions, available from any bank; such have formed the basis of numerous previous studies. The second type of data, obtained from the site studied, is classification information, based on branch consultant/expert judgment as to good and poor performance of branches. The purpose herein is to present a modified version of an existing benchmarking model, data envelopment analysis (DEA), and to show how this tool is applied in the banking industry. The mechanism used herein to incorporate expert knowledge within the DEA framework is to first apply a discriminant or classification tool, to quantify the functional relation that best captures the expert's mental model for performance. The outcome of this first phase is an orientation of variables to aid in the definition of inputs and outputs. The resulting orientation then defines the DEA model that makes up the second phase of the model.
TL;DR: In this article, a multi-faced buildup technique was used in the packing procedure for which there is no requirement for packed boxes to form flat layers and the basic algorithm was then augmented by a Look-ahead strategy.
Abstract: This paper provides a new approach to solving the three-dimensional packing problem. The heuristic developed uses a multi-faced buildup technique in the packing procedure for which there is no requirement for packed boxes to form flat layers. The basic algorithm is then augmented by a Look-ahead strategy. Experimental results indicate an average packing utilization of 87.8% which improve current benchmarks significantly. The new approaches given here add to heuristics currently available.
TL;DR: In this article, the authors considered the vehicle routing problem with soft time window constraints (VRPSTW), in which vehicles are allowed to service customers before and after the earliest and latest time window bounds, respectively.
Abstract: In this paper we consider the vehicle routing problem with soft time window constraints (VRPSTW), in which vehicles are allowed to service customers before and after the earliest and latest time window bounds, respectively. This relaxation comes at the expense of appropriate penalties that reflect the effect that time window violations have on the customers’ satisfaction. The problem is of particular importance for fleet planning as it allows decision-makers from both the logistics and marketing-sales side to determine minimal fleet sizes by appropriate contract negotiations for order delivery times. To solve the problem, we couple the nearest-neighbour method with a problem generator that provides, in a structured manner, numerous instances that result from the manipulation of the level of time window violations and the population of customers that allow such violations. The proposed heuristic results in solutions that reduce the number of vehicles required for the hard case and provide minimal violations of time windows. Computational results on a set of benchmark problems show that our method outperforms previous approaches to the vehicle routing problem with soft time windows, and that it can serve as the basis for efficient and effective fleet planning.