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A two-stage stochastic programming with recourse model for cross-border distribution with fleet management

A two-stage stochastic programming with recourse model for cross-border distribution with fleet management
A two-stage stochastic programming with recourse model for cross-border distribution with fleet management
One of the significant effects of the implementation of an open-door policy in China is that many Hong Kong-based manufacturers' production lines have been moved to China to take advantage of the lower production costs, lower wages and lower rental costs, but as a consequence the finished products must be delivered from China to Hong Kong. It has been discovered that, given a noisy set of data, distribution management cannot determine an appropriate strategy, and hence unnecessarily high expenditure is being incurred. In this paper, a stochastic linear programming model is developed to solve cross-border distribution problems in an environment of uncertainty. Under different economic growth scenarios, decision-makers can determine a long-term distribution strategy, including the optimal delivery routes and the optimal vehicle fleet composition. A set of data from a Hong Kong-based manufacturing company is used to demonstrate the robustness and effectiveness of our model. The analysis of two possible changes in distribution strategies is also considered. The proposed model can provide appropriate distribution strategy with fleet management in an uncertain environment.
supply-chain management, distribution planning, fleet management, stochastic programming
0953-7287
60-70
Leung, Stephen C. H.
0611a455-23c2-4a75-a197-adb3e3741957
Wu, Yue
e279101b-b392-45c4-b894-187e2ded6a5c
Leung, Stephen C. H.
0611a455-23c2-4a75-a197-adb3e3741957
Wu, Yue
e279101b-b392-45c4-b894-187e2ded6a5c

Leung, Stephen C. H. and Wu, Yue (2005) A two-stage stochastic programming with recourse model for cross-border distribution with fleet management. Production Planning & Control, 16 (1), 60-70. (doi:10.1080/095372870412331313357).

Record type: Article

Abstract

One of the significant effects of the implementation of an open-door policy in China is that many Hong Kong-based manufacturers' production lines have been moved to China to take advantage of the lower production costs, lower wages and lower rental costs, but as a consequence the finished products must be delivered from China to Hong Kong. It has been discovered that, given a noisy set of data, distribution management cannot determine an appropriate strategy, and hence unnecessarily high expenditure is being incurred. In this paper, a stochastic linear programming model is developed to solve cross-border distribution problems in an environment of uncertainty. Under different economic growth scenarios, decision-makers can determine a long-term distribution strategy, including the optimal delivery routes and the optimal vehicle fleet composition. A set of data from a Hong Kong-based manufacturing company is used to demonstrate the robustness and effectiveness of our model. The analysis of two possible changes in distribution strategies is also considered. The proposed model can provide appropriate distribution strategy with fleet management in an uncertain environment.

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More information

Published date: 2005
Keywords: supply-chain management, distribution planning, fleet management, stochastic programming

Identifiers

Local EPrints ID: 36363
URI: http://eprints.soton.ac.uk/id/eprint/36363
ISSN: 0953-7287
PURE UUID: 5628745f-3321-4f0a-9e6d-180659c8a1f7

Catalogue record

Date deposited: 22 May 2006
Last modified: 15 Jul 2019 19:04

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Contributors

Author: Stephen C. H. Leung
Author: Yue Wu

University divisions

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