Academic journal article
By Li, Kunpeng; Sivakumar, Appa Iyer; Mathirajan, M.; Ganesan, Viswanath Kumar
International Journal of Business , Vol. 9, No. 4
In this paper, we study the problem of synchronization of air transportation and assembly manufacturing to achieve accurate delivery with minimized delivery cost. This problem is observed in PC assembly manufacturing industry. There are two integrated decisions involved in the research problem and they are (1) optimal allocation of orders to various flights in the planning period and (2) an appropriate release time for each order to complete the assembly to match the first decision. We propose two solution methodologies for the research problem. An Integer Linear Programming model is developed for the first decision, backward scheduling logic for the second decision in solution methodology 1 and forward scheduling logic for the second decision in solution methodology 2. The computational experiments indicate that the proposed solution methodologies can achieve excellent average performance in comparison with an existing industry practice heuristic. Furthermore, the solution methodology with backward scheduling logic for determining orders' release time works better than the solution methodology with forward scheduling logic. The computational results demonstrate the effectiveness of our methodologies over a wide range of problem instances. Finally, managerial implications of the proposed methodology are presented.
JEL: C61, R41
Keywords: Consumer electronics supply chain; Air transportation; Assembly manufacturing; Synchronization; Backward scheduling logic
Consumer electronics products, which contribute a major share in many nations' GNP, are playing an important role in our daily life. Almost every home has one of the consumer electronics products such as a videocassette recorder, a compact disk player, or a digital videodisk player (Han et al. 2001). Thirty years ago, electronic calculators were beginning to penetrate mass markets in rich countries. Today, around half a billion people are using consumer electronics products (Ayres and Williams, 2004). Most of consumer electronics products are knowledge-intensive goods with high value-to-weight ratios, which comprise a growing share of global trade (Bowen, 2004). All these indicate that consumer electronics is a booming industry.
Today's consumer electronics manufacturing companies have to face the challenge of volatile demand, shorter product life cycles, product customization, and time to market and cost reduction. To meet these challenges, companies are moving toward global manufacturing network. Cooperation with all the participants within the network and effective utilization of global resources benefit the manufacturers to gain competition advantages. Operation in this global manufacturing network requires coordination of a global network of manufacturing units, warehouses or distribution points; the optimization of routings and logistics (Azevedo and Sousa, 2000). Within the consumer electronics supply chain (CESC), synchronization of manufacturing with transportation is especially important for consumer electronics manufacturers to improve performance with lower cost.
Furthermore, the competition among the consumer electronics industries forces a kind of JIT manufacturing philosophy to avoid both earliness and tardiness. Costs or penalties are incurred by delivering an order either earlier or later than the due date. The delivery earliness costs could result from the need for storage and insurance. The delivery tardiness cost consists of customer dissatisfaction, contract penalties, loss of sales, and loss of reputation. Orders transferred to the airport ahead of departure times incur waiting penalties. The penalties are particularly for handling and storage of the goods in the airport. Unlike the basic assembly and transportation cost of the products, these penalty costs can be minimized by achieving better synchronization in CESC.
Different consumer electronics assembly manufacturers have different strategies to manage the supply chain. …