Approaches to supply chain coordination: decomposed and decentralised decision making models

by Anu Thomas

Institution: Monash University
Department: Department of Mechanical and Aerospace Engineering and Indian Institute of Technology Bombay
Year: 2014
Keywords: Decentralised supply chain coordination; Lagrangian relaxation; Column generation; Coal supply chain; Decomposition approaches
Record ID: 1051912
Full text PDF: http://arrow.monash.edu.au/hdl/1959.1/1063163


Modern supply chains have shifted from hierarchical, one-dimensional supply chains and increasingly operate in a global supply network. Supply Chain Coordination (SCC) focuses on optimising operations such as supply, manufacturing and distribution in the supply network of an enterprise. The major concern in such networks is to achieve coordination without compromising the autonomy of individual units or partner organisations. This area provides ample opportunities for research. Different modelling approaches based on operational and decision-making aspects of the supply chain can be used to address SCC issues. An integrated model (IM) is one which combines the constraints and objectives of different decision making units (DMUs) into a single, huge optimisation model. Integration allows the supply chain to solve all its sub-components (DMUs) simultaneously and hence, it can guarantee feasibility across DMUs compared to solving the DMUs separately. However, such models, being large and complex, are computationally difficult to solve. The solution, if any, need not be optimal for all DMUs. Often, the independent players in the system are reluctant to share all their competitive information in public. If the players are not willing to share complete information, then an attempt at an IM is extremely difficult. Therefore, the development of alternative approaches for SCC becomes increasingly necessary. In this thesis, new approaches for SCC are proposed using decomposed and decentralised decision making models based on Lagrangian relaxation (LR) and column generation (CG) methods. This is motivated by a real-world coal mining example, which is generalised to a multi-resource constrained scheduling problem. The transition of solution approaches from integrated approaches to decomposed approaches and then to decentralised ones is presented. The industry seeks a coordination approach that can deliver quality solutions in a reasonable amount of time without compromising their autonomy and their confidential and competent information. Therefore, decentralised decision-making will be the driving force in the future for supply chain coordination. A two-party coordinated production-planning and resource-scheduling problem involving a set of independent producers (multiple mines) and a shared resource manager (rail operator) is considered. The decisions in this SC are decomposed by relaxing the resource sharing constraints which link the DMUs. Decomposition approaches based on LR and CG are then developed. Several strengthening methods and stabilisation techniques have been implemented to improve the LR and the CG algorithms. The decomposition approaches are compared with the integrated approach to benchmark the performance of distributed decision making. Decentralised approaches are developed by further reducing the information-sharing and eliminating the central coordinator in the decomposed approaches. The role of information-sharing in a decentralised approach and how to quantify the usefulness of an information, are also…