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Dynamic speed optimization in supply chains with stochastic demand

Berling, Peter LU and Martínez-De-Albéniz, Victor (2016) In Transportation Science 50(3). p.1114-1127
Abstract

In this paper, we analyze how to continuously adjust the speed in a supply chain with stochastic demand. For each unit (e.g., truckload, shipping container) in the chain, one must decide at which speed it should be moved downstream, given the state of the system, to minimize total supply chain costs. We decompose the problem into a set of one-dimensional subproblems that can be easily solved and characterize the optimal variable speed policy: under some assumptions, we show that it is optimal to set a speed that is first increasing in the distance to the market, and then decreasing. As a result, at optimality a given unit will experience an accelerating speed and then it will be slowed down, unless a demand occurs, in which case, the... (More)

In this paper, we analyze how to continuously adjust the speed in a supply chain with stochastic demand. For each unit (e.g., truckload, shipping container) in the chain, one must decide at which speed it should be moved downstream, given the state of the system, to minimize total supply chain costs. We decompose the problem into a set of one-dimensional subproblems that can be easily solved and characterize the optimal variable speed policy: under some assumptions, we show that it is optimal to set a speed that is first increasing in the distance to the market, and then decreasing. As a result, at optimality a given unit will experience an accelerating speed and then it will be slowed down, unless a demand occurs, in which case, the speed will be adjusted upward. We finally provide a transportation case study where we estimate the benefits of a variable-speed compared to a fixed-speed policy and show them to be significant both financially and from a CO2-emissions perspective.

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Please use this url to cite or link to this publication:
author
organization
publishing date
type
Contribution to journal
publication status
published
subject
keywords
Environmental impact, Expediting, Variable speed
in
Transportation Science
volume
50
issue
3
pages
14 pages
publisher
INFORMS Inst.for Operations Res.and the Management Sciences
external identifiers
  • scopus:84984903736
  • wos:000381289900021
ISSN
0041-1655
DOI
10.1287/trsc.2014.0561
language
English
LU publication?
yes
id
21cfb231-eaa8-4af0-b236-de6024ee2f28
date added to LUP
2017-02-22 14:02:33
date last changed
2017-09-18 11:34:31
@article{21cfb231-eaa8-4af0-b236-de6024ee2f28,
  abstract     = {<p>In this paper, we analyze how to continuously adjust the speed in a supply chain with stochastic demand. For each unit (e.g., truckload, shipping container) in the chain, one must decide at which speed it should be moved downstream, given the state of the system, to minimize total supply chain costs. We decompose the problem into a set of one-dimensional subproblems that can be easily solved and characterize the optimal variable speed policy: under some assumptions, we show that it is optimal to set a speed that is first increasing in the distance to the market, and then decreasing. As a result, at optimality a given unit will experience an accelerating speed and then it will be slowed down, unless a demand occurs, in which case, the speed will be adjusted upward. We finally provide a transportation case study where we estimate the benefits of a variable-speed compared to a fixed-speed policy and show them to be significant both financially and from a CO<sub>2</sub>-emissions perspective.</p>},
  author       = {Berling, Peter and Martínez-De-Albéniz, Victor},
  issn         = {0041-1655},
  keyword      = {Environmental impact,Expediting,Variable speed},
  language     = {eng},
  number       = {3},
  pages        = {1114--1127},
  publisher    = {INFORMS Inst.for Operations Res.and the Management Sciences},
  series       = {Transportation Science},
  title        = {Dynamic speed optimization in supply chains with stochastic demand},
  url          = {http://dx.doi.org/10.1287/trsc.2014.0561},
  volume       = {50},
  year         = {2016},
}