TY - JOUR
T1 - Optimizing logistics operations in a country’s currency supply network
AU - Huang, Yiwei
AU - Geismar, H. Neil
AU - Rajamani, Divakar
AU - Sethi, Suresh
AU - Sriskandarajah, Chelliah
AU - Carlos, Marcelo
N1 - Publisher Copyright:
© 2017 “IISE”.
PY - 2017
Y1 - 2017
N2 - We optimize a large country’s currency supply network for its central bank. The central bank provides currency to all branches (who in turn serve consumers and commerce) through its network of big vaults, regional vaults, and retail vaults. The central bank intends to reduce its total transportation cost by enlarging a few retail vaults to regional vaults. It seeks further reductions by optimizing the sourcing in the updated currency network. We develop an optimization model to select the retail vaults to upgrade, so that the total cost is minimized. Optimally choosing which retail vaults to upgrade is strongly NP-hard, so we develop an efficient heuristic that provides solutions whose costs average less than 3% above the optimum for realistic problem instances. An implementation of our methodology for a particular state has generated a total cost reduction of approximately 57% (equivalently, $2 million). To optimize the sourcing, we propose an alternative delivery process that further reduces the transportation cost by over 31% for the actual collected data and by over 38% for randomly generated data. This alternative optimizes the sourcing within the new currency network and requires significantly less computational effort.
AB - We optimize a large country’s currency supply network for its central bank. The central bank provides currency to all branches (who in turn serve consumers and commerce) through its network of big vaults, regional vaults, and retail vaults. The central bank intends to reduce its total transportation cost by enlarging a few retail vaults to regional vaults. It seeks further reductions by optimizing the sourcing in the updated currency network. We develop an optimization model to select the retail vaults to upgrade, so that the total cost is minimized. Optimally choosing which retail vaults to upgrade is strongly NP-hard, so we develop an efficient heuristic that provides solutions whose costs average less than 3% above the optimum for realistic problem instances. An implementation of our methodology for a particular state has generated a total cost reduction of approximately 57% (equivalently, $2 million). To optimize the sourcing, we propose an alternative delivery process that further reduces the transportation cost by over 31% for the actual collected data and by over 38% for randomly generated data. This alternative optimizes the sourcing within the new currency network and requires significantly less computational effort.
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U2 - 10.1080/0740817X.2016.1224958
DO - 10.1080/0740817X.2016.1224958
M3 - Article
AN - SCOPUS:85034582404
VL - 49
SP - 223
EP - 237
JO - IIE Transactions (Institute of Industrial Engineers)
JF - IIE Transactions (Institute of Industrial Engineers)
SN - 2472-5854
IS - 2
ER -