
-
Previous Article
A brief survey on stability and stabilization of impulsive systems with delayed impulses
- DCDS-S Home
- This Issue
-
Next Article
Existence of solutions for fractional instantaneous and non-instantaneous impulsive differential equations with perturbation and Dirichlet boundary value
Distributionally robust front distribution center inventory optimization with uncertain multi-item orders
1. | School of Management and Economics, Beijing Institute of Technology, Beijing 100081, China |
2. | Department of Intelligent Supply Chain, Beijing Jingdong Zhenshi Information Technology Co., Ltd., Beijing 100176, China |
As a new retail model, the front distribution center (FDC) has been recognized as an effective instrument for timely order delivery. However, the high customer demand uncertainty, multi-item order pattern, and limited inventory capacity pose a challenging task for FDC managers to determine the optimal inventory level. To this end, this paper proposes a two-stage distributionally robust (DR) FDC inventory model and an efficient row-and-column generation (RCG) algorithm. The proposed DR model uses a Wasserstein distance-based distributional set to describe the uncertain demand and utilizes a robust conditional value at risk decision criterion to mitigate the risk of distribution ambiguity. The proposed RCG is able to solve the complex max-min-max DR model exactly by repeatedly solving relaxed master problems and feasibility subproblems. We show that the optimal solution of the non-convex feasibility subproblem can be obtained by solving two linear programming problems. Numerical experiments based on real-world data highlight the superior out-of-sample performance of the proposed DR model in comparison with an existing benchmark approach and validate the computational efficiency of the proposed algorithm.
References:
[1] |
J. Acimovic and S. C. Graves,
Making better fulfillment decisions on the fly in an online retail environment, Manufacturing & Service Operations Management, 17 (2015), 34-51.
doi: 10.1287/msom.2014.0505. |
[2] |
J. Acimovic and S. C. Graves,
Mitigating spillover in online retailing via replenishment, Manufacturing & Service Operations Management, 19 (2017), 419-436.
|
[3] |
B. Bebitoglu, A. Șen and P. Kaminsky, Multi-location assortment optimization under capacity constraints, Available at SSRN 3249175, 2018.
doi: 10.2139/ssrn. 3249175. |
[4] |
A. Catalán and M. Fisher, Assortment allocation to distribution centers to minimize split customer orders, Available at SSRN 2166687. |
[5] |
B. Dai, H. Chen, Y. Li, Y. Zhang, X. Wang and Y. Deng, Inventory replenishment planning in a distribution system with safety stock policy and minimum and maximum joint replenishment quantity constraints, In 2019 International Conference on Industrial Engineering and Systems Management (IESM), (2019), 1–6.
doi: 10.1109/IESM45758.2019.8948155. |
[6] |
L. Deng, W. Bi, H. Liu and K. L. Teo,
A multi-stage method for joint pricing and inventory model with promotion constrains, Discrete Contin. Dyn. Syst. Ser. S, 13 (2020), 1653-1682.
doi: 10.3934/dcdss.2020097. |
[7] |
JD. com, https://ir.jd.com/static-files/8bc55c1e-93de-4b87-80f9-f6649375ff2f, 2021., |
[8] |
D. K. Nayak, S. S. Routray, S. K. Paikray and H. Dutta,
A fuzzy inventory model for weibull deteriorating items under completely backlogged shortages, Discrete Contin. Dyn. Syst. Ser. S, 14 (2021), 2435-2453.
doi: 10.3934/dcdss.2020401. |
[9] |
R. T. Rockafellar and S. Uryasev et al.,
Optimization of conditional value-at-risk, Stochastic Optimization: Algorithms and Applications, 54 (2001), 411-435.
doi: 10.1007/978-1-4757-6594-6_17. |
[10] |
M. Sion,
On general minimax theorems, Pacific J. Math., 8 (1958), 171-176.
doi: 10.2140/pjm.1958.8.171. |
[11] |
Z. Wang, K. You, S. Song and Y. Zhang,
Wasserstein distributionally robust shortest path problem, European J. Oper. Res., 284 (2020), 31-43.
doi: 10.1016/j.ejor.2020.01.009. |
[12] |
T. Wu, H. Mao, Y. Li and D. Chen, Assortment selection for a frontend warehouse: A robust data-driven approach, In 49th International Conference on Computers and Industrial Engineering (CIE 2019), (2019), 56–64. |
[13] |
P. J. Xu, Order Fulfillment in Online Retailing: What Goes Where, PhD thesis, Massachusetts Institute of Technology, 2005. |
[14] |
P. J. Xu, R. Allgor and S. C. Graves,
Benefits of reevaluating real-time order fulfillment decisions, Manufacturing & Service Operations Management, 11 (2009), 340-355.
doi: 10.1287/msom.1080.0222. |
[15] |
B. Zeng and L. Zhao,
Solving two-stage robust optimization problems using a column-and-constraint generation method, Oper. Res. Lett., 41 (2013), 457-461.
doi: 10.1016/j.orl.2013.05.003. |
[16] |
Y. Zhang, Z.-J. M. Shen and S. Song,
Exact algorithms for distributionally $\beta$-robust machine scheduling with uncertain processing times, INFORMS J. Comput., 30 (2018), 662-676.
doi: 10.1287/ijoc.2018.0807. |
[17] |
Y. Zhang, S. Song, Z.-J. M. Shen and C. Wu,
Robust shortest path problem with distributional uncertainty, IEEE Transactions on Intelligent Transportation Systems, 19 (2017), 1080-1090.
|
[18] |
S. Zhu, X. Hu, K. Huang and Y. Yuan,
Optimization of product category allocation in multiple warehouses to minimize splitting of online supermarket customer orders, European J. Oper. Res., 290 (2021), 556-571.
doi: 10.1016/j.ejor.2020.08.024. |
show all references
References:
[1] |
J. Acimovic and S. C. Graves,
Making better fulfillment decisions on the fly in an online retail environment, Manufacturing & Service Operations Management, 17 (2015), 34-51.
doi: 10.1287/msom.2014.0505. |
[2] |
J. Acimovic and S. C. Graves,
Mitigating spillover in online retailing via replenishment, Manufacturing & Service Operations Management, 19 (2017), 419-436.
|
[3] |
B. Bebitoglu, A. Șen and P. Kaminsky, Multi-location assortment optimization under capacity constraints, Available at SSRN 3249175, 2018.
doi: 10.2139/ssrn. 3249175. |
[4] |
A. Catalán and M. Fisher, Assortment allocation to distribution centers to minimize split customer orders, Available at SSRN 2166687. |
[5] |
B. Dai, H. Chen, Y. Li, Y. Zhang, X. Wang and Y. Deng, Inventory replenishment planning in a distribution system with safety stock policy and minimum and maximum joint replenishment quantity constraints, In 2019 International Conference on Industrial Engineering and Systems Management (IESM), (2019), 1–6.
doi: 10.1109/IESM45758.2019.8948155. |
[6] |
L. Deng, W. Bi, H. Liu and K. L. Teo,
A multi-stage method for joint pricing and inventory model with promotion constrains, Discrete Contin. Dyn. Syst. Ser. S, 13 (2020), 1653-1682.
doi: 10.3934/dcdss.2020097. |
[7] |
JD. com, https://ir.jd.com/static-files/8bc55c1e-93de-4b87-80f9-f6649375ff2f, 2021., |
[8] |
D. K. Nayak, S. S. Routray, S. K. Paikray and H. Dutta,
A fuzzy inventory model for weibull deteriorating items under completely backlogged shortages, Discrete Contin. Dyn. Syst. Ser. S, 14 (2021), 2435-2453.
doi: 10.3934/dcdss.2020401. |
[9] |
R. T. Rockafellar and S. Uryasev et al.,
Optimization of conditional value-at-risk, Stochastic Optimization: Algorithms and Applications, 54 (2001), 411-435.
doi: 10.1007/978-1-4757-6594-6_17. |
[10] |
M. Sion,
On general minimax theorems, Pacific J. Math., 8 (1958), 171-176.
doi: 10.2140/pjm.1958.8.171. |
[11] |
Z. Wang, K. You, S. Song and Y. Zhang,
Wasserstein distributionally robust shortest path problem, European J. Oper. Res., 284 (2020), 31-43.
doi: 10.1016/j.ejor.2020.01.009. |
[12] |
T. Wu, H. Mao, Y. Li and D. Chen, Assortment selection for a frontend warehouse: A robust data-driven approach, In 49th International Conference on Computers and Industrial Engineering (CIE 2019), (2019), 56–64. |
[13] |
P. J. Xu, Order Fulfillment in Online Retailing: What Goes Where, PhD thesis, Massachusetts Institute of Technology, 2005. |
[14] |
P. J. Xu, R. Allgor and S. C. Graves,
Benefits of reevaluating real-time order fulfillment decisions, Manufacturing & Service Operations Management, 11 (2009), 340-355.
doi: 10.1287/msom.1080.0222. |
[15] |
B. Zeng and L. Zhao,
Solving two-stage robust optimization problems using a column-and-constraint generation method, Oper. Res. Lett., 41 (2013), 457-461.
doi: 10.1016/j.orl.2013.05.003. |
[16] |
Y. Zhang, Z.-J. M. Shen and S. Song,
Exact algorithms for distributionally $\beta$-robust machine scheduling with uncertain processing times, INFORMS J. Comput., 30 (2018), 662-676.
doi: 10.1287/ijoc.2018.0807. |
[17] |
Y. Zhang, S. Song, Z.-J. M. Shen and C. Wu,
Robust shortest path problem with distributional uncertainty, IEEE Transactions on Intelligent Transportation Systems, 19 (2017), 1080-1090.
|
[18] |
S. Zhu, X. Hu, K. Huang and Y. Yuan,
Optimization of product category allocation in multiple warehouses to minimize splitting of online supermarket customer orders, European J. Oper. Res., 290 (2021), 556-571.
doi: 10.1016/j.ejor.2020.08.024. |


Sets | |
Set of product SKUs. |
|
Set of multi-item orders. |
|
Parameters | |
Number of SKU |
|
Net profit for each SKU |
|
Net profit for each multi-item order |
|
Holding cost for each SKU |
|
Holding cost for each multi-item order |
|
Occupied capacity for each SKU |
|
Capacity of the FDC. | |
Random Parameters | |
Random demand for the multi-item order |
|
Decision Variables and Functions | |
First-stage decision; Inventory level for SKU |
|
Second-stage decision; Number of satisfied multi-item order |
|
Second-stage net profit function for given |
Sets | |
Set of product SKUs. |
|
Set of multi-item orders. |
|
Parameters | |
Number of SKU |
|
Net profit for each SKU |
|
Net profit for each multi-item order |
|
Holding cost for each SKU |
|
Holding cost for each multi-item order |
|
Occupied capacity for each SKU |
|
Capacity of the FDC. | |
Random Parameters | |
Random demand for the multi-item order |
|
Decision Variables and Functions | |
First-stage decision; Inventory level for SKU |
|
Second-stage decision; Number of satisfied multi-item order |
|
Second-stage net profit function for given |
FDC A | FDC B | FDC C | |
Number of orders | 2632408 | 669161 | 1094012 |
Number of order types | 588994 | 226448 | 319329 |
Number of product SKUs | 684 | 659 | 684 |
FDC A | FDC B | FDC C | |
Number of orders | 2632408 | 669161 | 1094012 |
Number of order types | 588994 | 226448 | 319329 |
Number of product SKUs | 684 | 659 | 684 |
CVaR | Mean | |||||
DRM | SM | DRM | SM | |||
0.85 | 440033.1 | 425087.0 | 3.5 | 463652.7 | 451409.4 | 2.7 |
0.9 | 448351.2 | 429470.7 | 4.4 | 465044.1 | 448640.9 | 3.7 |
0.95 | 456801.3 | 435469.0 | 4.9 | 465726.2 | 445833.8 | 4.5 |
1 | 465673.0 | 444738.3 | 4.7 | 465673.0 | 444738.4 | 4.7 |
Std | SL | |||||
DRM | SM | DRM | SM | |||
0.85 | 96361.7 | 100889.8 | 4.5 | 0.855 | 0.831 | 2.9 |
0.9 | 100830.4 | 106131.3 | 5.0 | 0.851 | 0.819 | 3.9 |
0.95 | 104735.4 | 109443.4 | 4.3 | 0.845 | 0.811 | 4.2 |
1 | 106993.8 | 112404.5 | 4.8 | 0.841 | 0.803 | 4.7 |
CVaR | Mean | |||||
DRM | SM | DRM | SM | |||
0.85 | 440033.1 | 425087.0 | 3.5 | 463652.7 | 451409.4 | 2.7 |
0.9 | 448351.2 | 429470.7 | 4.4 | 465044.1 | 448640.9 | 3.7 |
0.95 | 456801.3 | 435469.0 | 4.9 | 465726.2 | 445833.8 | 4.5 |
1 | 465673.0 | 444738.3 | 4.7 | 465673.0 | 444738.4 | 4.7 |
Std | SL | |||||
DRM | SM | DRM | SM | |||
0.85 | 96361.7 | 100889.8 | 4.5 | 0.855 | 0.831 | 2.9 |
0.9 | 100830.4 | 106131.3 | 5.0 | 0.851 | 0.819 | 3.9 |
0.95 | 104735.4 | 109443.4 | 4.3 | 0.845 | 0.811 | 4.2 |
1 | 106993.8 | 112404.5 | 4.8 | 0.841 | 0.803 | 4.7 |
CVaR | Mean | |||||
DRM | SM | DRM | SM | |||
5000 | 382737.4 | 362668.6 | 5.5 | 385246.1 | 369465.5 | 4.3 |
6000 | 416751.5 | 389990.2 | 6.9 | 422162.8 | 398222.2 | 6.0 |
7000 | 440279.7 | 409294.0 | 7.6 | 447352.9 | 419146.7 | 6.7 |
8000 | 456801.3 | 435469.0 | 4.9 | 465726.2 | 445833.8 | 4.5 |
9000 | 468414.9 | 452002.1 | 3.6 | 478903.7 | 463654.4 | 3.3 |
10000 | 475970.4 | 463618.8 | 2.7 | 488072.9 | 476586.1 | 2.4 |
Std | SL | |||||
DRM | SM | DRM | SM | |||
5000 | 49968.8 | 78203.2 | 36.1 | 0.656 | 0.632 | 3.8 |
6000 | 74686.2 | 90576.8 | 17.5 | 0.727 | 0.703 | 3.4 |
7000 | 90135.3 | 102933.8 | 12.4 | 0.792 | 0.755 | 4.9 |
8000 | 104735.4 | 109443.4 | 4.3 | 0.845 | 0.811 | 4.2 |
9000 | 116587.0 | 119930.5 | 2.8 | 0.891 | 0.858 | 3.8 |
10000 | 126971.5 | 128840.1 | 1.5 | 0.928 | 0.905 | 2.5 |
CVaR | Mean | |||||
DRM | SM | DRM | SM | |||
5000 | 382737.4 | 362668.6 | 5.5 | 385246.1 | 369465.5 | 4.3 |
6000 | 416751.5 | 389990.2 | 6.9 | 422162.8 | 398222.2 | 6.0 |
7000 | 440279.7 | 409294.0 | 7.6 | 447352.9 | 419146.7 | 6.7 |
8000 | 456801.3 | 435469.0 | 4.9 | 465726.2 | 445833.8 | 4.5 |
9000 | 468414.9 | 452002.1 | 3.6 | 478903.7 | 463654.4 | 3.3 |
10000 | 475970.4 | 463618.8 | 2.7 | 488072.9 | 476586.1 | 2.4 |
Std | SL | |||||
DRM | SM | DRM | SM | |||
5000 | 49968.8 | 78203.2 | 36.1 | 0.656 | 0.632 | 3.8 |
6000 | 74686.2 | 90576.8 | 17.5 | 0.727 | 0.703 | 3.4 |
7000 | 90135.3 | 102933.8 | 12.4 | 0.792 | 0.755 | 4.9 |
8000 | 104735.4 | 109443.4 | 4.3 | 0.845 | 0.811 | 4.2 |
9000 | 116587.0 | 119930.5 | 2.8 | 0.891 | 0.858 | 3.8 |
10000 | 126971.5 | 128840.1 | 1.5 | 0.928 | 0.905 | 2.5 |
T(s) | Var. | Cons. | |||||
5000 | 57.897 | 32.835 | 3 | 66606 | 36421 | 22.107 | 330 |
6000 | 67.840 | 32.131 | 3 | 67259 | 37625 | 34.127 | 330 |
7000 | 51.998 | 20.851 | 2 | 67259 | 31003 | 29.824 | 220 |
8000 | 59.025 | 20.980 | 2 | 67259 | 31003 | 36.657 | 220 |
9000 | 66.092 | 21.044 | 2 | 67259 | 31003 | 43.591 | 220 |
10000 | 72.998 | 21.054 | 2 | 67259 | 31003 | 50.402 | 220 |
Average | 62.642 | 24.816 | 2.33 | 67150 | 33010 | 36.118 | 256.667 |
T(s) | Var. | Cons. | |||||
5000 | 57.897 | 32.835 | 3 | 66606 | 36421 | 22.107 | 330 |
6000 | 67.840 | 32.131 | 3 | 67259 | 37625 | 34.127 | 330 |
7000 | 51.998 | 20.851 | 2 | 67259 | 31003 | 29.824 | 220 |
8000 | 59.025 | 20.980 | 2 | 67259 | 31003 | 36.657 | 220 |
9000 | 66.092 | 21.044 | 2 | 67259 | 31003 | 43.591 | 220 |
10000 | 72.998 | 21.054 | 2 | 67259 | 31003 | 50.402 | 220 |
Average | 62.642 | 24.816 | 2.33 | 67150 | 33010 | 36.118 | 256.667 |
[1] |
Reza Lotfi, Yahia Zare Mehrjerdi, Mir Saman Pishvaee, Ahmad Sadeghieh, Gerhard-Wilhelm Weber. A robust optimization model for sustainable and resilient closed-loop supply chain network design considering conditional value at risk. Numerical Algebra, Control and Optimization, 2021, 11 (2) : 221-253. doi: 10.3934/naco.2020023 |
[2] |
Meng Xue, Yun Shi, Hailin Sun. Portfolio optimization with relaxation of stochastic second order dominance constraints via conditional value at risk. Journal of Industrial and Management Optimization, 2020, 16 (6) : 2581-2602. doi: 10.3934/jimo.2019071 |
[3] |
Han Zhao, Bangdong Sun, Hui Wang, Shiji Song, Yuli Zhang, Liejun Wang. Optimization and coordination in a service-constrained supply chain with the bidirectional option contract under conditional value-at-risk. Discrete and Continuous Dynamical Systems - S, 2022 doi: 10.3934/dcdss.2022021 |
[4] |
Vladimir Gaitsgory, Tanya Tarnopolskaya. Threshold value of the penalty parameter in the minimization of $L_1$-penalized conditional value-at-risk. Journal of Industrial and Management Optimization, 2013, 9 (1) : 191-204. doi: 10.3934/jimo.2013.9.191 |
[5] |
Haodong Yu, Jie Sun. Robust stochastic optimization with convex risk measures: A discretized subgradient scheme. Journal of Industrial and Management Optimization, 2021, 17 (1) : 81-99. doi: 10.3934/jimo.2019100 |
[6] |
Ripeng Huang, Shaojian Qu, Xiaoguang Yang, Zhimin Liu. Multi-stage distributionally robust optimization with risk aversion. Journal of Industrial and Management Optimization, 2021, 17 (1) : 233-259. doi: 10.3934/jimo.2019109 |
[7] |
K. F. Cedric Yiu, S. Y. Wang, K. L. Mak. Optimal portfolios under a value-at-risk constraint with applications to inventory control in supply chains. Journal of Industrial and Management Optimization, 2008, 4 (1) : 81-94. doi: 10.3934/jimo.2008.4.81 |
[8] |
Kegui Chen, Xinyu Wang, Min Huang, Wai-Ki Ching. Compensation plan, pricing and production decisions with inventory-dependent salvage value, and asymmetric risk-averse sales agent. Journal of Industrial and Management Optimization, 2018, 14 (4) : 1397-1422. doi: 10.3934/jimo.2018013 |
[9] |
Shihan Di, Dong Ma, Peibiao Zhao. $ \alpha $-robust portfolio optimization problem under the distribution uncertainty. Journal of Industrial and Management Optimization, 2022 doi: 10.3934/jimo.2022054 |
[10] |
Han Yang, Jia Yue, Nan-jing Huang. Multi-objective robust cross-market mixed portfolio optimization under hierarchical risk integration. Journal of Industrial and Management Optimization, 2020, 16 (2) : 759-775. doi: 10.3934/jimo.2018177 |
[11] |
Engel John C Dela Vega, Robert J Elliott. Conditional coherent risk measures and regime-switching conic pricing. Probability, Uncertainty and Quantitative Risk, 2021, 6 (4) : 267-300. doi: 10.3934/puqr.2021014 |
[12] |
Émilie Chouzenoux, Henri Gérard, Jean-Christophe Pesquet. General risk measures for robust machine learning. Foundations of Data Science, 2019, 1 (3) : 249-269. doi: 10.3934/fods.2019011 |
[13] |
Chuong Van Nguyen, Phuong Huu Hoang, Hyo-Sung Ahn. Distributed optimization algorithms for game of power generation in smart grid. Numerical Algebra, Control and Optimization, 2019, 9 (3) : 327-348. doi: 10.3934/naco.2019022 |
[14] |
Magdalena Graczyk-Kucharska, Robert Olszewski, Marek Golinski, Malgorzata Spychala, Maciej Szafranski, Gerhard Wilhelm Weber, Marek Miadowicz. Human resources optimization with MARS and ANN: Innovation geolocation model for generation Z. Journal of Industrial and Management Optimization, 2021 doi: 10.3934/jimo.2021149 |
[15] |
Sanjoy Kumar Paul, Ruhul Sarker, Daryl Essam. Managing risk and disruption in production-inventory and supply chain systems: A review. Journal of Industrial and Management Optimization, 2016, 12 (3) : 1009-1029. doi: 10.3934/jimo.2016.12.1009 |
[16] |
Jingzhen Liu, Lihua Bai, Ka-Fai Cedric Yiu. Optimal investment with a value-at-risk constraint. Journal of Industrial and Management Optimization, 2012, 8 (3) : 531-547. doi: 10.3934/jimo.2012.8.531 |
[17] |
Xi Chen, Zongrun Wang, Songhai Deng, Yong Fang. Risk measure optimization: Perceived risk and overconfidence of structured product investors. Journal of Industrial and Management Optimization, 2019, 15 (3) : 1473-1492. doi: 10.3934/jimo.2018105 |
[18] |
Fengming Lin, Xiaolei Fang, Zheming Gao. Distributionally Robust Optimization: A review on theory and applications. Numerical Algebra, Control and Optimization, 2022, 12 (1) : 159-212. doi: 10.3934/naco.2021057 |
[19] |
Yufei Sun, Grace Aw, Kok Lay Teo, Guanglu Zhou. Portfolio optimization using a new probabilistic risk measure. Journal of Industrial and Management Optimization, 2015, 11 (4) : 1275-1283. doi: 10.3934/jimo.2015.11.1275 |
[20] |
Hanyu Gu, Hue Chi Lam, Yakov Zinder. Planning rolling stock maintenance: Optimization of train arrival dates at a maintenance center. Journal of Industrial and Management Optimization, 2022, 18 (2) : 747-772. doi: 10.3934/jimo.2020177 |
2021 Impact Factor: 1.865
Tools
Metrics
Other articles
by authors
[Back to Top]