step change in agri-food logistics ecosystems (project scale)

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STEP CHANGE IN AGRI-FOOD LOGISTICS ECOSYSTEMS (PROJECT SCALE) http://www.projectscale.eu/

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Page 1: STEP CHANGE IN AGRI-FOOD LOGISTICS ECOSYSTEMS (PROJECT SCALE)

STEP CHANGE IN AGRI-FOOD LOGISTICS ECOSYSTEMS (PROJECT SCALE)

http://www.projectscale.eu/

Page 2: STEP CHANGE IN AGRI-FOOD LOGISTICS ECOSYSTEMS (PROJECT SCALE)

Modeling a stochastic inventory routing problem for perishable products with

environmental considerationsM. Soysal, J.M. Bloemhof-Ruwaard, R. Haijema, J.G.A.J. van der Vorst

Operations Research and Logistics, Wageningen University

Barcelona 2014, 13-18 July

Page 3: STEP CHANGE IN AGRI-FOOD LOGISTICS ECOSYSTEMS (PROJECT SCALE)

Inventory Routing Problem (IRP)

1. When to deliver to each customer,

2. How much to deliver to each customer each time it is served,

3. How to combine customers into vehicle routes

Coordination of inventory management and vehicle routing

* Traditional assumptions for the IRP

Page 4: STEP CHANGE IN AGRI-FOOD LOGISTICS ECOSYSTEMS (PROJECT SCALE)

Related literature

Contribution: Developing a comprehensive stochastic chance-constrained programming model for a generic IRP that accounts for the KPIs of total energy use (emissions), total driving time, total routing cost, total inventory cost, total waste cost, and total cost.

Authors Topics

Federgruen et al. 1986 Perishability, Demand uncertainty

Treitl et al. 2012 Traveled distance, vehicle load and speed

Al-ehashem and Rekik 2013 Traveled distance

Le et al. 2013 Perishability

Coelho and Laporte 2014 Perishability

Jia et al. 2014 Perishability

Page 5: STEP CHANGE IN AGRI-FOOD LOGISTICS ECOSYSTEMS (PROJECT SCALE)

Problem description

Single vendor, multiple customers

Homogeneous vehicles at the vendor

Routes start and end at the vendor's location

Demand of a customer two or more vehicles

Demand ~ N(μit,σit)

Inventory at the customers (Fixed shelf life of m≥2 periods)

The demand should be met with a probability of at least α

The routes and quantity of shipments in each period such that the total cost comprising routing, inventory and waste costs is minimized

Page 6: STEP CHANGE IN AGRI-FOOD LOGISTICS ECOSYSTEMS (PROJECT SCALE)

Fuel consumption estimation

• Comprehensive emissions model of Barth et al., 2005.

• Other emission estimation models (Demir et al., 2011).

• The total amount of fuel used EC (liters) for traversing a distance a (m) at constant speed f (m/s) with load F (kg) is calculated as follows:

• Same approach in Bektas and Laporte (2011), Demir et al. (2012) and Franceschetti et al. (2013).

Page 7: STEP CHANGE IN AGRI-FOOD LOGISTICS ECOSYSTEMS (PROJECT SCALE)

Stochastic chance-constrained programming model (MPF)

Minimise Expected inventory cost + Expected waste cost + Fuel cost from transportation operations + Driver cost

Page 8: STEP CHANGE IN AGRI-FOOD LOGISTICS ECOSYSTEMS (PROJECT SCALE)

Stochastic chance-constrained programming model (MPF)

Inventory decisions:

Inventory balance

Waste calculation

Service level

Routing decisions:

Flow conservation

Each vehicle at most 1 route

per period

Vehicle capacities

Eliminate subtours

Page 9: STEP CHANGE IN AGRI-FOOD LOGISTICS ECOSYSTEMS (PROJECT SCALE)

Deterministic approximation MPF and

variations

Benefits of including perishability and explicit fuel consumption considerations in the model

* Simulation model

Page 10: STEP CHANGE IN AGRI-FOOD LOGISTICS ECOSYSTEMS (PROJECT SCALE)

Application

1 DC, 11 supermarkets

Planning horizon is four weeks

Capacity of vehicles 10 tonnes

Random demand means with cv 0.1

Service target 95%

Shelf life 2 weeks

The ILOG-OPL development studio and CPLEX 12.6 optimization package and Visual C++ programming language

The fresh tomato distribution operations of a supermarket chain operating in Turkey.

Page 11: STEP CHANGE IN AGRI-FOOD LOGISTICS ECOSYSTEMS (PROJECT SCALE)

Key Performance Indicators

Total emissions,

Total driving time,

Total routing cost comprised of fuel and wage cost,

Total inventory cost,

Total waste cost,

Total cost.

Page 12: STEP CHANGE IN AGRI-FOOD LOGISTICS ECOSYSTEMS (PROJECT SCALE)

Base case solution

Page 13: STEP CHANGE IN AGRI-FOOD LOGISTICS ECOSYSTEMS (PROJECT SCALE)

Base case solution of MPF

Page 14: STEP CHANGE IN AGRI-FOOD LOGISTICS ECOSYSTEMS (PROJECT SCALE)

Base case solution-III

Page 15: STEP CHANGE IN AGRI-FOOD LOGISTICS ECOSYSTEMS (PROJECT SCALE)

Sensitivity analysis

13 additional scenarios:

Demand means, two additional demand set

Coefficient of variation, C = 0.05, 0.1, 0.15, 0.2

Maximum shelf life, m = 2, 3, 4

Holding cost, h = 0.03, 0.06, 0.09, 0.12

Service level, α = 90, 92.5, 95, 97.5

Page 16: STEP CHANGE IN AGRI-FOOD LOGISTICS ECOSYSTEMS (PROJECT SCALE)

Environmental impact minimization M`PF

Minimise Exp. inv. cost + Exp. waste cost + Fuel cost + Driver cost

Page 17: STEP CHANGE IN AGRI-FOOD LOGISTICS ECOSYSTEMS (PROJECT SCALE)

Conclusions

We modeled and analysed the IRP to account for perishability, explicit fuel consumption and demand uncertainty.

The model is unique in using a comprehensive emission function and in modeling waste and service level constraints as a result of uncertain demand.

Integrated model more useful than a basic model.

THANK YOU !!

QUESTIONS?? [email protected]