Shipment planning and safety stock placement in maritime supply chains with stochastic demand and transportation times

Majid Yazdani and Tarik Aouam

International Journal of Production Economics, 2023, vol. 263, issue C

Abstract: This paper introduces and studies shipment planning and safety stock placement in bulk and semi-bulk maritime supply chains. This problem jointly optimizes the assignment of destinations to origins, shipment quantities of multiple products by determining the share of the contract by sea transport options, sailing speed, and multi-echelon safety stocks with the objective to minimize the expected total transportation and inventory cost. In the case of a serial system supplying a single product, we analytically characterize the effect of sailing speed and different time and cost parameters on optimal safety stock placement. For the general case, the integrated problem can be solved in four different ways. We present a mixed integer nonlinear program (MINLP) and the superior reformulation of the mixed integer conic quadratic integer program (MICQP) that can be solved using state-of-the-art solvers. Then, we propose two exact solution procedures that iteratively approximate the nonlinear terms in the objective function and constraints. Our numerical experiments illustrate the interdependence between safety stock placement, assignment decisions, and sailing speed. Results also show that it is important to adopt multi-stage inventory optimization and there is an added value in integrating shipment planning and safety stock placement. Furthermore, computational experiments demonstrate that all the solution approaches are alternatives to solving small instance sizes. For medium and large instances, the solvers are unable to provide quality solutions within one hour while the iterative procedures find optimal or near-optimal solutions in reasonable CPU times.

Keywords: Maritime supply chains; Safety stock placement; Shipment planning; Guaranteed service approach; Sailing speed; Stochastic sailing and port times (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0925527323001846
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:proeco:v:263:y:2023:i:c:s0925527323001846

DOI: 10.1016/j.ijpe.2023.108952

Access Statistics for this article

International Journal of Production Economics is currently edited by Stefan Minner

More articles in International Journal of Production Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().