Kuehne Foundation Chair LEGO Laboratory for Supply Chain Technology and System Research
Supply chain management studies manufacturing systems, transportation systems, and logistics systems based on data for optimal decision making to improve operational efficiency. Usually the systems studied in supply chain management is in large scale and made of complex sub-systems interacted and connected with each other. It is a challenge to have a laboratory environment for the study of supply chain operation systems with those used in business context given space and financial constraints, e.g. automatic warehouse in full size.
In June 2017, Kuehne Foundation Chair has Kuehne Foundation Chair LEGO Laboratory for Supply Chain Technology and System Research established in CDHK. The lab uses LEGO Mindstorms EV3 to design and build supply chain systems, which gives an alternative to teach and study large complex supply chain system in a flexible, affordable way in a laboratory environment catching the essence of supply chain systems used in real operations.
The lab is used to design and study various supply chain operation systems with applications of robotic, IT technology for innovative research, hands-on teaching and training. The lab is to fulfill the objectives of
- Demonstrating the concept of the Internet of Thing (IoT), smart supply chain systems.
- Realizing operation optimization solutions in a simulation environment.
- Integrating new technologies into designing and improving supply chain operation systems.
- Exploring data mining (big data) applications and digitalization of logistics operations.
- Becoming an open technology platform for students, researchers and logistics practitioners
Currently, the lab has 3 systems installed, 1) the automatic warehouse system 2) queuing and manufacturing system 3) automatic guide vehicle (AGV) system. The automatic warehouse is to study theories and algorithms deciding the optimal routing for loading and unloading. The queuing and manufacturing system is to explore the uncertain and dynamic behavior issues arising from the interaction of multiple systems. The AGV system is to integrate the warehouse and queuing/manufacturing system by using both magnetic and color guiding technology. For more technique details, please refer to the attached PowerPoint file.
A series projects are under exploration, for example, all the systems are linked and controlled wirelessly by using various sensors and control bricks (computers), which makes a network of smart devices, we are looking at the application of Internet of Things application by leveraging the network of smart devices.
1. „The Role of an Invisible Hand in Supply Chain Performance“ with Scott Webster
The competitive equilibrium paradigm predicts optimal product pricing in a supply chain comprised of multiple buyers and multiple sellers. The result specifies the mathematical underpinnings for Adam Smith’s seminal principle of an invisible hand – buyers and sellers freely pursuing their own interests in a market economy are led, as if by an invisible hand, to an outcome that is best overall. In other words, competitive equilibrium paradigm predicts that supply chain coordination should occur automatically, as if guided by and invisible hand. In contrast, the analysis of a supply chain comprised of one buyer and one seller predicts inflated pricing, a phenomenon that has come to be known as double marginalization. In this research, we will try to investigate these alternative theories for the purposes of identifying environmental characteristics that are conducive to (near) system optimal decisions by independent firms in a supply chain.
2. „Ordering and Pricing a Fashion Product to Minimize Ex-Post Regret“with Scott Webster, Charles Wang
We consider the problem of ordering and pricing a leading-edge fashion product. The retailer cannot re-order during the brief period of time when the product is targeted to a segment of high-paying consumers. Product that remains after the „selling season“ will be marked down for broader market appeal. Product leftover from the „clearance season“ will be sold through a liquidator at known salvage value. At the beginning of the „selling season“, the retailer does not know the probability distributions of consumer valuation for the product, but is able to accurately estimate their lower and upper limits. After the „selling season“, the retailer observes sales and uses this information to determine the clearance price for the product. The objective is to minimize the maximum loss in profit with information update, or minimax ex-post regret. We derive closed-form expressions for optimal quantity and/or prices for a series of single-product minimax ex-post regret problems.
3. „Ordering Seasonal Product in Association with Pricing Responding Coupon to Maximize the Profit“
During Full Moon Festival, many moon cake manufacturers in China sell moon cake gift cards at a discount to the companies or other organizations which give the gift cards to their employees or customers free who could use the gift card to redeem the moon cake. Very often, those gift card holders will cash the gift card by selling them to a scalper at deeper discount. The scalper will either sell the gift card, at the prices lower than the gift card face value, to some consumers who would like to buy moon cake at a cheaper price, or will return the gift card to redeem the moon cake or will return the unsold gift cards to the manufacturers at a price higher than his purchasing price but lower than the manufacturer initial selling price. We would like to understand how moon cake gift card impact the supply chain performance.
1. Logistics Model of Cross-Border E-Commerce
Cross-border e-commerce grows significantly in recent years. There is a trend that more and more end users are participating overseas online shopping which brings the challenges to existing logistics models driven by traditional international trading.
The study is to answer the following questions:
– What are (new) service requirements related to e-commerce?
– What do the new service requirements mean to the transformation of the existing logistics models in cross border E-Commerce?
– How could the traditional logistics model be transformed to accommodate the cross border E-Commerce?
2. Concept for Urban Logistics Network Design
The research is a joint project in association with the leading local express service company. The goal is to reduce transport waste and to increase urban mobility efficiency through logistics optimization. The focus of the project is on substantial field tests in commercial transport in city logistics.