Journal Articles (Peer-Reviewed)
Wagner, Stephan M., Kristoph Ullrich and Sandra Transchel (2014): The game plan for aligning the organization, Business Horizons, 57 (2): 189-201.
Abstract: Better-aligned operational and strategic plans and a better balance of supply and demand bring tangible benefits to firms. However, functional departments in firms often operate without vertical and horizontal alignment. The outcomes are delays and amplification of the information flow, suboptimal corporate plans, uncoordinated reactions within the business, insufficient operational flexibility, and discrepancies in supply and demand. Sales and operations planning (S&OP) can circumvent these negative consequences and align the organization. Our multi-method research develops a holistic S&OP maturity model that firms can use for the assessment of their internal S&OP processes and shows the pathway to an integrated S&OP approach for the achievement of a better-aligned organization. We present a case study of a medium-sized, Swiss-based pharmaceutical company that has recently implemented S&OP to highlight why companies implement S&OP, the prerequisites and roadblocks encountered during implementation, and the benefits envisioned and achieved. Finally, we reveal the great relevance of the topic by means of a questionnaire survey which shows that organizations’ current S&OP performance is underdeveloped and that many improvements are indispensable to enjoy all benefits associated with the alignment process.
Bansal, Saurabh and Sandra Transchel (2014): Managing Supply Risk for Vertically Differentiated Co-Products, Production and Operations Management, 23 (9): 1577-1598.
Abstract: The manufacturing complexity of many high-tech products results in a substantial variation in the quality of the units produced. After manufacturing, the units are classified into vertically differentiated products. These products are typically obtained in uncontrollable fractions, leading to mismatches between their demand and supply. We focus on product stockouts due to the supply–demand mismatches. Existing literature suggests that when faced with product stockouts, firms should satisfy all unmet demand of a low-end product by downgrading excess units of a high-end product (downward substitution). However, this policy may be suboptimal if it is likely that low-end customers will substitute with a higher quality product and pay the higher price (upward substitution). In this study, we investigate whether and how much downward substitution firms should perform. We also investigate whether and how much low-end inventory firms should withhold to strategically divert some low-end demand to the high-end product. We first establish the existence of regions of co-production technology and willingness of customers to substitute upward where firms adopt different substitution/withholding strategies. Then, we develop a managerial framework to determine the optimal selling strategy during the life cycle of technology products as profit margins shrink, manufacturing technology improves, and more capacity becomes available. Consistent trends exist for exogenous and endogenous prices.
Transchel, Sandra, Stefan Minner, Josef Kallrath, Nils Löhndorf and Ulrich Eberhard (2011): A hybrid general lot-sizing and scheduling formulation for a production process with a two-stage product structure, International Journal of Production Research, 49 (9): 2463-2480.
Abstract: Tailored for a complex application in the process industry, this article examines a multi-product production planning and scheduling problem with sequence-dependent setup cost and times. The manufacturing process is characterised by a two-stage structure where the sequencing problem occurs on the first level and contribution margin, holding cost, penalty cost are accounted on the second level. We present a hybrid mixed-binary optimisation model based on the general lot-sizing and scheduling problem [Fleischmann, B. and Meyr, H. 1997. The general lotsizing and scheduling problem. OR Spectrum, 19 (1), 11–21], which combines discrete and continuous-time elements within a standard inventory and lot-size (I&L) formulation. Since the I&L formulation does not provide sharp linear programming-relaxation bounds, we present two alternative reformulations based on a transportation problem. In a numerical study inspired by real industry data, we show that on average, both reformulations yield significant improvements in computation time and integrality gap.
Transchel, Sandra and Stefan Minner (2011): Economic lot-sizing and dynamic quantity competition, International Journal of Production Economics, 133 (1): 416-422.
Abstract: We study a problem of dynamic quantity competition in continuous time with two competing retailers facing different replenishment cost structures. Retailer 1 faces fixed ordering costs and variable procurement costs and all inventory kept in stock is subject to holding costs. Retailer 2 only faces variable procurement costs. Both retailers are allowed to change their sales quantities dynamically over time. Following the structure of the economic order quantity (EOQ) model, retailer 1 places replenishment orders in batches and retailer 2 follows a just-in-time (JIT) policy. The objective of both retailers is to maximize their individual average profit anticipating the competitor's replenishment and output decisions. The problem is solved by a two-stage hierarchical optimization approach using backwards induction. The second-stage model is a differential game in output quantities between the two retailers for a given cycle length. At the first stage, the replenishment policy is determined. We prove the existence of a unique optimal solution and derive an open-loop Nash equilibrium. We show that both retailers follow contrary output strategies over the order cycle. The EOQ retailer, driven by inventory holding costs, decreases his market share whereas the output of the JIT retailer increases. Moreover, depending on the cost structure, the EOQ retailer might partially be a monopolist. At the first stage, the EOQ retailer determines the cycle length, anticipating the optimal output trajectories at the second stage.
Minner, Stefan and Sandra Transchel (2010): Periodic review inventory-control for perishable products under service-level constraints, OR spectrum, 32 (4): 979-996.
Abstract: Food retail inventory management faces major challenges by uncertain demand, perishability, and high customer service level requirements. In this paper, we present a method to determine dynamic order quantities for perishable products with limited shelf-life, positive lead time, FIFO or LIFO issuing policy, and multiple service level constraints. In a numerical study, we illustrate the superiority of the proposed method over commonly suggested order-up-to-policies. We show that a constant-order policy might provide good results under stationary demand, short shelf-life, and LIFO inventory depletion.
Kelle, Peter, Sandra Transchel and Stefan Minner (2009): Buyer–supplier cooperation and negotiation support with random yield consideration, International Journal of Production Economics, 118 (1): 152-159.
Abstract: Random yield is still prevailing in several industries despite quality improvement efforts. In this case, the supply chain partners jointly must find the best way to cope with yield uncertainty. We focus on the inventory-related costs that can be influenced by adjusting the ordering, setup, and delivery policy to the random yield. The yield model of having a random proportion of defective items is assumed with known mean and variance. Two alternative scenarios are examined: when the buyer or when the supplier makes 100% inspection. We provide analytic tools and approximations to optimize the decisions. Our main contribution is to help in the cooperation and negotiation process by showing under which circumstances have the yield characteristics important effects and when are they negligible. We show that not the average yield but the yield uncertainty plays the critical role mainly in providing an appropriate service level but also in finding the optimal shipment and setup policy.
Transchel, Sandra and Stefan Minner (2009): The impact of dynamic pricing on the economic order decision, European Journal of Operational Research, 198 (3): 773-789.
Abstract: This paper analyzes the impact of dynamic pricing on the single product economic order decision of a monopolist retailer. Items are procured from an external supplier according to the economic order quantity (EOQ) model and are sold to customers on a single market without competition following the simple monopolist pricing problem. Coordinated decision making of optimal pricing and ordering is influenced by operating costs – including ordering and inventory holding costs – and the demand rate obtained from a price response function. The retailer is allowed to vary the selling price, either in a fixed number of discrete points in time or continuously. While constant and continuous pricing have received much attention in the literature, problems with a limited number of price changes are rather rare. This paper illustrates the benefit of dynamically changing prices to achieve operational efficiency in the EOQ model, that is to trigger high demand rates when inventories are high. We provide structural properties of the optimal time instants when the price should be changed. Taking into account costs for changes in price, it provides numerical guidance on number, timing, and size of price changes during an order cycle. Numerical examples show that the benefits of dynamic pricing in an EOQ framework can be achieved with only a few price changes and that products being unprofitable under static pricing may become profitable under dynamic pricing.
Transchel, Sandra and Stefan Minner (2009): Dynamic pricing and replenishment in the warehouse scheduling problem—A common cycle approach, International Journal of Production Economics, 118 (1): 331-338.
Abstract: In this paper, we consider the problem at the interface of marketing and operations to find the optimal lot-size and selling price for multiple products that share a warehouse with limited storage capacity. We analyze the impact of coordinated decision making on the selling price and the replenishment policy compared to a decentralized decision. Furthermore, we compare constant pricing where the selling price remains constant over the entire planning horizon and dynamic pricing where the firm is allowed to adjust the selling price continuously. The objective is to maximize the average profit by choosing the optimal pricing strategy, the optimal lot-sizes, and the optimal staggering of the order releases. This paper provides both analytical and numerical results on the impact of a joint optimization on the pricing and replenishment decisions and the potential benefits compared to the decentralized approach. We develop mathematical models for the different decision frameworks, provide algorithms to determine the optimal policy parameters, and show that the peak storage requirement is equal at each replenishment. Furthermore, we show in a numerical example that achieving operational efficiency through dynamic pricing in the warehouse scheduling problem is even more beneficial than in the economic order quantity framework.
Transchel, Sandra and Stefan Minner (2008): Coordinated Lot-sizing and Dynamic Prizing under a Supplier All-units Quantity Discount, Business Research, 1 (1): 125-141.
Abstract: We consider an economic order quantity model where the supplier offers an all-units quantity discount and a price sensitive customer demand. We compare a decentralized decision framework where selling price and replenishment policy are determined independently to simultaneous decision making. Constant and dynamic pricing are distinguished. We derive structural properties and developalgorithms that determine the optimal pricing and replenishment policy and show how quantity discounts not only influence the purchasing strategy but also the pricing policy. A sensitivity analysis indicates the impact of the fixed-holding cost ratio, the discount policy, and the customers' price sensitivity on the optimal decisions.
Inderfurth, Karl and Sandra Transchel (2007): Technical Note—Note on “Myopic Heuristics for the Random Yield Problem”, Operations Research, 55 (6): 1183-1186.
Abstract: Bollapragada and Morton (1999) present several well-performing heuristics for solving the periodic inventory problem with random yield and demand. Their approach is essentially based on a transformation of the single-period problem into a standard newsvendor problem with deterministic yield and random demand which, however, is supply dependent. In our note, we show that their evaluation of the respective optimality condition is not correct. This explains the steady deterioration of their myopic heuristics for parameter constellations that correspond to increasing service levels. Some computational investigations reveal that the performance of the heuristics can become quite poor if service levels are high and exceed those values for which results are reported in the original study. Nonetheless, up to now these heuristics are still the best ones available for solving the joint random yield problem.
Transchel, Sandra (2008): Integrated supply and demand management in operations: Mannheim.
Abstract: The goal matching supply with demand, which is the fundament of supply chain management, has changed the role of operations management from pure cost control to value creation. The recent developments of integrating revenue management with supply chain management activities and the resulting successes have indicated the tremendous potential to improve the supply chain performance in the same way that revenue management has revolutionized the airline industry. This thesis investigates how an integration of revenue management and supply chain management influences decision making and the overall profitability. In particular, simultaneous decision making of selling price, inventory control strategy and capacity acquisition is analyzed.