A global supply chain model with transfer pricing and transportation cost allocation

doi:10.1016/S0377-2217(99)00431-2

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A global supply chain model with transfer pricing and transportation cost allocation

Journal Article•DOI•

A global supply chain model with transfer pricing and transportation cost allocation

Carlos Julio Vidal¹, Marc Goetschalckx²•Institutions (2)

University of Valle¹, Georgia Institute of Technology²

15 Feb 2001-European Journal of Operational Research (North-Holland)-Vol. 129, Iss: 1, pp 134-158

TL;DR: A heuristic solution algorithm is developed that applies successive linear programming based on the reformulation and the relaxation of the original problem to produce feasible solutions with very small gaps between the solutions and their upper bound.

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About: This article is published in European Journal of Operational Research.The article was published on 2001-02-15. It has received 336 citations till now. The article focuses on the topics: Active set method & Successive linear programming.

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Journal Article•DOI•

Facility location and supply chain management - A review

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M.T. Melo¹, Stefan Nickel¹, Stefan Nickel², Francisco Saldanha-da-Gama³•Institutions (3)

Fraunhofer Society¹, Saarland University², University of Lisbon³

16 Jul 2009-European Journal of Operational Research

TL;DR: Basic features that facility location models must capture to support decision-making involved in strategic supply chain planning are identified and applications ranging across various industries are presented.

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1,770 citations

Additional excerpts

...Multiple commodities [11,52,56,132,137] [14]...
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...[109 ] [111 ] [120 ] [127 ] [132 ] [133 ] [135 ] [136 ]...
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...Vidal and Goetschalckx [132] U U...
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...[118 ] [121 ][126 ][128 ] [129 ] [132 ] [134 ] [138 ]...
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Journal Article•DOI•

A stochastic programming approach for supply chain network design under uncertainty

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Tjendera Santoso¹, Shabbir Ahmed¹, Marc Goetschalckx¹, Alexander Shapiro¹•Institutions (1)

Georgia Institute of Technology¹

16 Nov 2005-European Journal of Operational Research

TL;DR: This paper proposes a stochastic programming model and solution algorithm for solving supply chain network design problems of a realistic scale and integrates a recently proposed sampling strategy, the sample average approximation scheme, with an accelerated Benders decomposition algorithm to quickly compute high quality solutions.

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1,044 citations

Cites background or methods from "A global supply chain model with tr..."

...Our second test problem is a global supply chain network design problem described in [33]....
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...We used the values for the demand and capacity parameters used in the deterministic models of [7] and [33] as the mean values for the random parameters....
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...We used the same data for the deterministic parameter values as in [7] (for the domestic problem) and [33] (for the global problem)....
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...Moreover, the arrival of regional economic alliances, for instance the Asian Pacific Economic Alliance and the European Union, have prompted many corporations to move more and more towards global supply chains, and therefore to become exposed to risky factors such as exchange rates, reliability of transportation channels, and transfer prices [33]....
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Journal Article•DOI•

Global supply chain design: A literature review and critique

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Mary J. Meixell¹, Vidyaranya B. Gargeya²•Institutions (2)

George Mason University¹, University of North Carolina at Greensboro²

01 Nov 2005-Transportation Research Part E-logistics and Transportation Review

TL;DR: It is concluded that although most models resolve a difficult feature associated with globalization, few models address the practical global supply chain design problem in its entirety.

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Abstract: In this paper, we review decision support models for the design of global supply chains, and assess the fit between the research literature in this area and the practical issues of global supply chain design The classification scheme for this review is based on ongoing and emerging issues in global supply chain management and includes review dimensions for (1) decisions addressed in the model, (2) performance metrics, (3) the degree to which the model supports integrated decision processes, and (4) globalization considerations We conclude that although most models resolve a difficult feature associated with globalization, few models address the practical global supply chain design problem in its entirety We close the paper with recommendations for future research in global supply chain modeling that is both forward-looking and practically oriented

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784 citations

Cites background from "A global supply chain model with tr..."

...…only six of the models—Breitman and Lucas (1987); Cohen et al. (1989); Cohen and Lee (1989); Arntzen et al. (1995); Munson and Rosenblatt (1997); and Vidal and Goetschalckx (2001)—provide a bill of material constraint to allow for complex product structures over multiple tiers in the global supply…...
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...There are six cases of this type—Cohen et al. (1989); Cohen and Lee (1989); Arntzen et al. (1995); Munson and Rosenblatt (1997); Vidal and Goetschalckx (2001); and Nagurney et al. (2003)....
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...In the Vidal and Goetschalckx (2001) model, the component costs are transfer prices when supplied by internal production locations, and market prices for external suppliers....
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...Most of the models provide the structure to explicitly evaluate the impact of extraordinary transportation costs in global supply chains, but only two—Arntzen et al. (1995) and Vidal and Goetschalckx (2001)—incorporate the impact of long transit times in cost terms....
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...We also see financing arrangements (Hodder and Dincer, 1986), product allocation (Breitman and Lucas, 1987), production shifting (Haug, 1992; Kogut and Kulatilaka, 1994), and transportation mode selection (Vidal and Goetschalckx, 2001) listed as decision variables in these models....
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Journal Article•DOI•

The Design of Robust Value-Creating Supply Chain Networks: A Critical Review †

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Walid Klibi¹, Alain Martel¹, Adel Guitouni¹•Institutions (1)

Laval University¹

01 Jun 2010-European Journal of Operational Research

TL;DR: This paper argues for the assessment of SCN robustness as a necessary condition to ensure sustainable value creation and contributes to framing the foundations for a robust SCN design methodology.

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750 citations

Cites background from "A global supply chain model with tr..."

...Finally, several authors have proposed extensions to maximize residual cash flows in an international context (Cohen et al., 1989; Arntzen et al., 1995; Vidal and Goetschalckx, 2001; Goetschalckx et al., 2002; Bhutta, 2004; Kouvelis et al., 2004; Martel, 2005; Meixell et al., 2005)....
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Journal Article•DOI•

A scenario planning approach for the flood emergency logistics preparation problem under uncertainty

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Mei-Shiang Chang¹, Ya-Ling Tseng², Jing-Wen Chen³•Institutions (3)

Chung Yuan Christian University¹, National Central University², Chung Hua University³

01 Nov 2007-Transportation Research Part E-logistics and Transportation Review

TL;DR: In this article, the authors developed a decision-making tool that can be used by government agencies in planning for flood emergency logistics. But the decision variables include the structure of rescue organizations, locations of rescue resource storehouses, allocations of rescue resources under capacity restrictions, and distributions of resources.

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Abstract: This paper aims to develop a decision-making tool that can be used by government agencies in planning for flood emergency logistics. In this article, the flood emergency logistics problem with uncertainty is formulated as two stochastic programming models that allow for the determination of a rescue resource distribution system for urban flood disasters. The decision variables include the structure of rescue organizations, locations of rescue resource storehouses, allocations of rescue resources under capacity restrictions, and distributions of rescue resources. By applying the data processing and network analysis functions of the geographic information system, flooding potential maps can estimate the possible locations of rescue demand points and the required amount of rescue equipment. The proposed models are solved using a sample average approximation scheme. Finally, a real example of planning for flood emergency logistics is presented to highlight the significance of the proposed model as well as the efficacy of the proposed solution strategy.

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516 citations

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References

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Journal Article•DOI•

Global Supply Chain Management at Digital Equipment Corporation

[...]

Bruce C Arntzen, Gerald G. Brown, Terry P. Harrison, Linda L Trafton

01 Feb 1995-Interfaces

TL;DR: The Global Supply Chain Model (GSCM) as mentioned in this paper is a large mixed-integer linear program that incorporates a global, multi-product bill of materials for supply chains with arbitrary echelon structure and a comprehensive model of integrated global manufacturing and distribution decisions.

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Abstract: Digital Equipment Corporation evaluates global supply chain alternatives and determines worldwide manufacturing and distribution strategy, using the Global Supply Chain Model (GSCM) which recommends a production, distribution, and vendor network. GSCM minimizes cost or weighted cumulative production and distribution times or both subject to meeting estimated demand and restrictions on local content, offset trade, and joint capacity for multiple products, echelons, and time periods. Cost factors include fixed and variable production charges, inventory charges, distribution expenses via multiple modes, taxes, duties, and duty drawback. GSCM is a large mixed-integer linear program that incorporates a global, multi-product bill of materials for supply chains with arbitrary echelon structure and a comprehensive model of integrated global manufacturing and distribution decisions. The supply chain restructuring has saved over $100 million (US).

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774 citations

Journal Article•DOI•

Strategic production-distribution models: A critical review with emphasis on global supply chain models

[...]

Carlos Julio Vidal¹, Carlos Julio Vidal², Marc Goetschalckx²•Institutions (2)

University of Valle¹, Georgia Institute of Technology²

01 Apr 1997-European Journal of Operational Research

TL;DR: An extensive literature review of strategic production-distribution models is presented, placing special emphasis on models for global logistics systems, addressing their lack of features, and identifying opportunities for further research in this area.

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770 citations

Journal Article•DOI•

Jointly Constrained Biconvex Programming

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Faiz A. Al-Khayyal, James E. Falk

01 May 1983-Mathematics of Operations Research

TL;DR: It is proved that the minimum of a biconcave function over a nonempty compact set occurs at a boundary point of the set and not necessarily an extreme point and the algorithm is proven to converge to a global solution of the nonconvex program.

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Abstract: This paper presents a branch-and-bound algorithm for minimizing the sum of a convex function in x, a convex function in y and a bilinear term in x and y over a closed set. Such an objective function is called biconvex with biconcave functions similarly defined. The feasible region of this model permits joint constraints in x and y to be expressed. The bilinear programming problem becomes a special case of the problem addressed in this paper. We prove that the minimum of a biconcave function over a nonempty compact set occurs at a boundary point of the set and not necessarily an extreme point. The algorithm is proven to converge to a global solution of the nonconvex program. We discuss extensions of the general model and computational experience in solving jointly constrained bilinear programs, for which the algorithm has been implemented.

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566 citations

Journal Article•DOI•

Quadratic programming with one negative eigenvalue is NP-hard

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Panos M. Pardalos¹, Stephen A. Vavasis²•Institutions (2)

Pennsylvania State University¹, Cornell University²

01 Mar 1991-Journal of Global Optimization

TL;DR: It is shown that the problem of minimizing a concave quadratic function with one concave direction is NP-hard, and this result can be interpreted as an attempt to understand exactly what makes nonconvex quadRatic programming problems hard.

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Abstract: We show that the problem of minimizing a concave quadratic function with one concave direction is NP-hard. This result can be interpreted as an attempt to understand exactly what makes nonconvex quadratic programming problems hard. Sahni in 1974 [8] showed that quadratic programming with a negative definite quadratic term (n negative eigenvalues) is NP-hard, whereas Kozlov, Tarasov and Hacijan [2] showed in 1979 that the ellipsoid algorithm solves the convex quadratic problem (no negative eigenvalues) in polynomial time. This report shows that even one negative eigenvalue makes the problem NP-hard.

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523 citations

Journal Article•DOI•

αBB: A global optimization method for general constrained nonconvex problems

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Ioannis P. Androulakis¹, Costas D. Maranas¹, Christodoulos A. Floudas¹•Institutions (1)

Princeton University¹

01 Dec 1995-Journal of Global Optimization

TL;DR: The proposed branch and bound type algorithm attains finiteε-convergence to the global minimum through the successive subdivision of the original region and the subsequent solution of a series of nonlinear convex minimization problems.

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Abstract: A branch and bound global optimization method,αBB, for general continuous optimization problems involving nonconvexities in the objective function and/or constraints is presented. The nonconvexities are categorized as being either of special structure or generic. A convex relaxation of the original nonconvex problem is obtained by (i) replacing all nonconvex terms of special structure (i.e. bilinear, fractional, signomial) with customized tight convex lower bounding functions and (ii) by utilizing the α parameter as defined in [17] to underestimate nonconvex terms of generic structure. The proposed branch and bound type algorithm attains finitee-convergence to the global minimum through the successive subdivision of the original region and the subsequent solution of a series of nonlinear convex minimization problems. The global optimization method,αBB, is implemented in C and tested on a variety of example problems.

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442 citations