University of Central Florida STARS Electronic Theses and Dissertations, 2004-2019 2005 A Methodology For Minimizing The Oscillations In Supply Chains Using System Dynamics And Genetic Algorithms Ramamoorthy C.V.V. Lakkoju University of Central Florida Part of the Engineering Commons Find similar works at: https://stars.library.ucf.edu/etd University of Central Florida Libraries http://library.ucf.edu This Masters Thesis (Open Access) is brought to you for free and open access by STARS. It has been accepted for inclusion in Electronic Theses and Dissertations, 2004-2019 by an authorized administrator of STARS. For more information, please contact [email protected]. STARS Citation Lakkoju, Ramamoorthy C.V.V., "A Methodology For Minimizing The Oscillations In Supply Chains Using System Dynamics And Genetic Algorithms" (2005). Electronic Theses and Dissertations, 2004-2019. 463. https://stars.library.ucf.edu/etd/463 A METHODOLOGY FOR MINIMIZING THE OSCILLATIONS IN SUPPLY CHAINS USING SYSTEM DYNAMICS AND GENETIC ALGORITHMS By RAMAMOORTHY C.V.V. LAKKOJU B.Tech., S.V.U.C.E., Tirupati, India, 2002 A thesis submitted in partial fulfillment of the requirements for the degree of Master of Science in the Department of Industrial Engineering and Management Systems in the College of Engineering and Computer Science at the University of Central Florida Orlando, Florida Summer 2005 ABSTRACT Supply Chain Management (SCM) is a critically significant strategy that enterprises depend on to meet challenges that they face because of highly competitive and dynamic business environments of today. Supply chain management involves the entire network of processes from procurement of raw materials/services/technologies to manufacturing or servicing intermediate products/services to converting them into final products or services and then distributing and retailing them till they reach final customers. A supply chain network by nature is a large and complex, engineering and management system. Oscillations occurring in a supply chain because of internal and/or external influences and measures to be taken to mitigate/minimize those oscillations are a core concern in managing the supply chain and driving an organization towards a competitive advantage. The objective of this thesis is to develop a methodology to minimize the oscillations occurring in a supply chain by making use of the techniques of System Dynamics (SD) and Genetic Algorithms (GAs). System dynamics is a very efficient tool to model large and complex systems in order to understand their complex, non-linear dynamic behavior. GAs are stochastic search algorithms, based on the mechanics of natural selection and natural genetics, used to search complex and non-linear search spaces where traditional techniques may be unsuitable. ii ACKNOWLEDGEMENTS This thesis was made possible with the help, cooperation and contribution of many people and I wish to wholeheartedly thank them all very much. First and foremost, I wish to thank and express my utmost gratitude to my advisor, Dr. Luis Rabelo, for his invaluable guidance, support and encouragement through out this research work. This thesis would not have been possible without the efforts and guidance of my advisor. I wish to deeply thank my family, which has been highly instrumental in whatever I have accomplished till today. I deeply thank all my friends for all their support, encouragement and good wishes wherever I go. I thank my best friend Deepak for all his help and support with the C++ programming. Also, I would like to thank my friends Ashish and Hamid for their help in getting me started with Vensim modeling and Genetic Algorithms respectively. Finally, I would like to thank all other UCF staff and faculties who helped me in various ways throughout the duration of my studies. iii TABLE OF CONTENTS CHAPTER 1: INTRODUCTION....................................................................................... 1 1.1 Supply Chain Management....................................................................................... 1 1.2 System Dynamics...................................................................................................... 3 1.3 Genetic Algorithms................................................................................................... 4 1.4 Uniqueness and Contribution of this Thesis ............................................................. 5 1.5 Thesis Outline ........................................................................................................... 6 CHAPTER 2: LITERATURE REVIEW............................................................................ 7 2.1 Supply Chain Management....................................................................................... 8 2.2 System Dynamics and its applications in Supply Chain Management................... 14 2.3 Genetic Algorithms................................................................................................. 17 2.3.1 Working Principle of Genetic Algorithms....................................................... 18 2.3.2. Genetic Operators ........................................................................................... 22 2.3.3. Differences between GAs and other traditional optimization techniques ...... 24 2.4 Genetic Algorithms and their applications in Supply Chain Management............. 25 2.5 Summary................................................................................................................. 28 CHAPTER 3: SUPPLY CHAIN MODEL DESCRIPTION ............................................ 30 3.1 Modeling in System Dynamics............................................................................... 31 3.2 System Dynamics Model of LSMC’s Supply Chain .............................................. 33 3.2.1 Reference Modes for LSMC Supply Chain Modeling .................................... 35 3.2.2 Causal Loop Diagrams..................................................................................... 37 3.2.3 Stocks and Flows Diagram of LSMC Supply Chain ....................................... 44 3.3 Model Validation .................................................................................................... 50 iv 3.4 Important Observations about LSMC Supply Chain.............................................. 52 3.5 Summary................................................................................................................. 53 CHAPTER 4: OPTIMIZATION MODULE DEVELOPMENT...................................... 54 4.1 Optimization Criteria for the problems in LSMC Supply Chain............................ 54 4.2 Development of Real-Coded Genetic Algorithm ................................................... 55 4.2.1. Working Procedure of the RCGA................................................................... 57 4.2.2. Genetic Operators Used in the RCGA............................................................ 61 4.3 The C++ Program for RCGA and its Integration with Vensim System Dynamics Model ............................................................................................................................ 64 4.3.1. Running the Algorithm ................................................................................... 66 4.4 Results and Analysis for LSMC Model.................................................................. 69 CHAPTER 5: CONCLUSION ......................................................................................... 72 5.1 Conclusion .............................................................................................................. 72 5.2 Contribution of the Thesis ...................................................................................... 72 5.3 Scope of the Thesis ................................................................................................. 73 5.4 Ideas for Potential Future Work.............................................................................. 73 REFERENCES ................................................................................................................. 75 v LIST OF FIGURES Figure 3.1 Causal loop diagrams ...................................................................................... 32 Figure 3.2 Stocks and flows in system dynamics ............................................................. 33 Figure 3.3 Increase in production will result in increase in demand ................................ 37 Figure 3.4 More market share, more expansion for LSMC.............................................. 38 Figure 3.5 Increase in profit increases competition, and decrease in profit decreases competition ............................................................................................................... 38 Figure 3.6 Growth of LSMC............................................................................................. 39 Figure 3.8 Impact of competition on LSMC market share............................................... 41 Figure 3.9 Causal loop diagram of LSMC’s SC categorized in managerial action areas. 43 Figure 3.10 Production Model (Reference-Lertpattarapong, 2002) ................................. 45 Figure 3.11 Table for Order Fulfillment........................................................................... 46 Figure 3.12 Inventory, Backlog and Shipping sub-model (Lertpattarapong, 2000)......... 47 Figure 3.13 Market Share sub-model (Lertpattarapong, 2000) ........................................ 48 Figure 3.14 Shipment Model (Lertpattarapong, 2000)