Terry Harrison and Ching-Hua Chen-Ritzo Present at ICS's Poster Session
The Institute for Computational Science's (ISC) Computation Day was held on February 17, 2005, to bring together the PSU computational science community so that people can meet one another and can share ideas and find opportunities for new research collaborations. Terry Harrison and Ching-Hua Chen-Ritzo presented a poster entitled "Optimization of Configure-To-Order (CTO) Supply Chains via Large Scale Stochastic Programming."
This research focuses on the issue of configuration uncertainty that is present in CTO systems, which refers to the fact that the precise quantity and mix of components required to produce a product is not known until a customer has actually placed an order. Configuration uncertainty makes it challenging for manufacturers to determine future component requirements and set quarterly sales/revenue targets. In the academic literature, the former issue has not been dealt with on a realistic scale, while the latter issue has been largely ignored. Meanwhile, the use of stochastic optimization models for dealing with configuration uncertainty has been minimal, in practice. This research addresses these gaps in the research and in practice.
The results suggest that dealing with configuration uncertainty in configure-to-order supply chains is effective in improving expected profits. Future work will involve developing specialized methods for dealing with larger problem sizes. In addition, the case where the supply commitment in the implosion problem is flexible rather than fixed will be considered.