Adeptive Supply Cahin

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Preprints of the 18th IFAC World Congress Milano (Italy) August 28 - September 2, 2011

ON APPLICABILITY OF OPTIMAL CONTROL THEORY TO ADAPTIVE SUPPLY CHAIN PLANNING AND SCHEDULING Dmitry Ivanov*, Alexandre Dolgui**, Boris Sokolov*** *University of Hamburg, Department of Business Administration Chair of Operations Management, 20146 Hamburg, Germany Phone: +49 371 53138947; E-Mail: dmitri.ivanov@mail.ru **Ecole Nationale Supérieure des Mines de Saint-Etienne Laboratoire en Sciences et Technologies de l'Information (LSTI) 158, Cours Fauriel, 42023 Saint-Etienne cedex 2, France E-Mail: dolgui@emse.fr ***Insitute for Informatics and Automation of the RAS (SPIIRAS) V.O. 14 line, 39 199178 St. Petersburg, Russia; E-Mail: sokol@iias.spb.su Abstract: Decisions in supply chain (SC) planning and scheduling are interconnected and depend a great deal on tackling uncertainty and dynamics of structures and processes in SCs that evolve over time. In this paper, we investigate the applicability of optimal control theory (OCT) to SC planning and scheduling based on the analysis of different streams in application of control theory to SCM and our own elaborations. Some drawbacks and missing links in the literature are pointed out. Several crucial application areas of control theory to SCM are discussed. We conclude that with the help of control theory, stability, adaptability and disaster-tolerance of SCs can be investigated in their fullness and consistency with operations planning and execution control within a conceptually and mathematically integrated framework. However, although SCs resemble control systems, they have some peculiarities which do not allow a direct application of control theoretic methods. The combined application of OCT and operations research enriches the possibilities to develop solutions for many practical problems of SC management (SCM). At the same time, mathematics of OCT requires domain-specific modifications to be consistent with discrete processes and decision-making in SCM. We argue for a co-operation between control experts and SC managers that has the potential to introduce more realism to the dynamic planning and models and improve SCM policies. Copyright © 2011 IFAC Keywords: supply chain; dynamics; planning; scheduling; control; optimal program control; adaptation; robustness. 1. INTRODUCTION The term “supply chain management” (SCM) was coined in the 1980-90s. A supply chain (SC) is a network of organizations, flows, and processes wherein suppliers, cooperate and coordinate along the entire value chain to acquire raw materials, to convert these raw materials into specified final products, and to deliver them to customers. SCM studies human decisions on cross-enterprise collaboration and coordination processes to transform and use the SC resources in the most rational way along the entire value chain, from raw material suppliers up to customers, based on functional and structural integration, cooperation, and coordination. The impact of SCM on the changes in enterprise management paradigms can be compared with the developments of total quality management (TQM) in 60-70s and computer-integrated manufacturing (CIM) in 80-90s. Along with considerable advancements in (optimal) SC design, planning and scheduling (Simchi-Levi et al. 2004, Chen 2010, Hall and Liu 2011), the SCM research community Copyright by the International Federation of Automatic Control (IFAC) 423

faces the challenges of governing SC dynamics (Lee 2004, Graves and Willems 2005, Kouvelis et al. 2006). The research focus is now shifting to a paradigm that the performance of SCs is to interrelate to dynamics, adaptability, stability, and crisis-resistance Stable SC processes in a complex environment support enterprise competitiveness. On the contrary, the “overheated” SCs lack of resilience and stability (recent world financial crisis, natural catastrophes, and everyday discrepancies in matching demand and supply evidence enough for it). In...
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