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See detailEmpirical risk assessment of maintenance costs under full-service contracts
Deprez, Laurens UL; Antonio, Katrien; Boute, Robert

in European Journal of Operational Research (in press)

We provide a data-driven framework to conduct a risk assessment, including data pre-processing, exploration, and statistical modeling, on a portfolio of full-service maintenance contracts. These contracts ... [more ▼]

We provide a data-driven framework to conduct a risk assessment, including data pre-processing, exploration, and statistical modeling, on a portfolio of full-service maintenance contracts. These contracts cover all maintenance-related costs for a fixed, upfront fee during a predetermined horizon. Charging each contract a price proportional to its risk prevents adverse selection by incentivizing low risk (i.e., maintenance-light) profiles to not renege on their agreements. We borrow techniques from non-life insurance pricing and tailor them to the setting of maintenance contracts to assess the risk and estimate the expected maintenance costs under a full-service contract. We apply the framework on a portfolio of about 5 000 full-service contracts of industrial equipment and show how a data-driven analysis based on contract and machine characteristics, or risk factors, supports a differentiated, risk-based break-even tariff plan. We employ generalized additive models (GAMs) to predict the risk factors’ impact on the frequency (number of) and severity (cost) of maintenance interventions. GAMs are interpretable yet flexible statistical models that capture the effect of both continuous and categorical risk factors. Our predictive models quantify the impact of the contract and machine type, service history, and machine running hours on the contract cost. We additionally utilize the predictive cost distributions of our models to augment the break-even price with the appropriate risk margins to further protect against the inherently stochastic nature of the maintenance costs. The framework shows how maintenance intervention data can set up a differentiated tariff plan. [less ▲]

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See detailRent, sell, and remanufacture: The manufacturer’s choice when remanufacturing can be outsourced
liu, Jian; Mantin, Binyamin UL; Song, Xuefeng

in European Journal of Operational Research (2022), 303(1), 184-200

Manufacturers have increasingly started offering rental options for the products they sell. Renting products offers an opportunity: segmenting consumers. However, this also raises a challenge: what to do ... [more ▼]

Manufacturers have increasingly started offering rental options for the products they sell. Renting products offers an opportunity: segmenting consumers. However, this also raises a challenge: what to do with the returned products? One solution is to remanufacture these products and then rent or resell them. Subsequently, should remanufacturing be outsourced to a third-party firm that can remanufacture at a lower cost? Here, we use a multi-period setting and examine the optimal decisions for different selling and renting constellations. Importantly, we allow the manufacturing costs of the sales and rental products to differ, as they seem to be critical in determining the manufacturer's renting and selling decisions and remanufacturing strategies. For example, under integrated (i.e. in-house) remanufacturing, when the new rental product's manufacturing cost is sufficiently high, no remanufacturing happens. Under both remanufacturing strategies—integrated and outsourced—the manufacturer does not rent new products in the second period if the manufacturing costs of the sales and rental products are identical. If the rental product's manufacturing cost is either sufficiently low or high, then integrated remanufacturing is more profitable; when this manufacturing cost is within a moderate range, the manufacturer outsources remanufacturing to an independent remanufacturer. Surprisingly, in some situations, the production quantity of the new sales product may even increase with its manufacturing cost. This is because the manufacturer may extract an even higher margin compared with the new rental product. Finally, we also consider several extensions such as uncertainty regarding the quality of the returned goods, simultaneous selling and renting of remanufactured goods, and longer horizons and the product's life cycle. [less ▲]

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See detailA dynamic “predict, then optimize” preventive maintenance approach using operational intervention data
van Staden, Heletje E.; Deprez, Laurens UL; Boute, Robert

in European Journal of Operational Research (2022)

We investigate whether historical machine failures and maintenance records may be used to derive future machine failure estimates and, in turn, prescribe advancements of scheduled preventive maintenance ... [more ▼]

We investigate whether historical machine failures and maintenance records may be used to derive future machine failure estimates and, in turn, prescribe advancements of scheduled preventive maintenance interventions. We model the problem using a sequential predict, then optimize approach. In our prescriptive optimization model, we use a finite horizon Markov decision process with a variable order Markov chain, in which the chain length varies depending on the time since the last preventive maintenance action was performed. The model therefore captures the dependency of a machine’s failures on both recent failures as well as preventive maintenance actions, via our prediction model. We validate our model using an original equipment manufacturer data set and obtain policies that prescribe when to deviate from the planned periodic maintenance schedule. To improve our predictions for machine failure behavior with limited to no past data, we pool our data set over different machine classes by means of a Poisson generalized linear model. We find that our policies can supplement and improve on those currently applied by 5%, on average. [less ▲]

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See detailGas Storage Valuation in Incomplete Markets
Löhndorf, Nils UL; Wozabal, David

in European Journal of Operational Research (2021), 288(1), 318-330

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See detailMetaheuristics for the Online Printing Shop Scheduling Problem
Tessaro Lunardi, Willian UL; Birgin, Ernesto G.; Ronconi, Débora P. et al

in European Journal of Operational Research (2020)

In this work, the online printing shop scheduling problem introduced in (Lunardi et al., Mixed Integer Linear Programming and Constraint Programming Models for the Online Printing Shop Scheduling Problem ... [more ▼]

In this work, the online printing shop scheduling problem introduced in (Lunardi et al., Mixed Integer Linear Programming and Constraint Programming Models for the Online Printing Shop Scheduling Problem, Computers & Operations Research, to appear) is considered. This challenging real scheduling problem, that emerged in the nowadays printing industry, corresponds to a flexible job shop scheduling problem with sequencing flexibility; and it presents several complicating specificities such as resumable operations, periods of unavailability of the machines, sequence-dependent setup times, partial overlapping between operations with precedence constraints, and fixed operations, among others. A local search strategy and metaheuristic approaches for the problem are proposed and evaluated. Based on a common representation scheme, trajectory and populational metaheuristics are considered. Extensive numerical experiments with large-sized instances show that the proposed methods are suitable for solving practical instances of the problem; and that they outperform a half-heuristic-half-exact off-the-shelf solver by a large extent. Numerical experiments with classical instances of the flexible job shop scheduling problem show that the introduced methods are also competitive when applied to this particular case. [less ▲]

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See detailManaging Strategic Inventories under Investment in Process Improvement
Mantin, Benny UL; Veldman, Jasper

in European Journal of Operational Research (2019), 279(3), 782-794

In supplier-retailer interactions, the retailer may carry inventories strategically as a bargaining mechanism to induce the supplier to drop the future wholesale price. As per Anand, Anupindi, and Bassok ... [more ▼]

In supplier-retailer interactions, the retailer may carry inventories strategically as a bargaining mechanism to induce the supplier to drop the future wholesale price. As per Anand, Anupindi, and Bassok (2008), the introduction of strategic inventories always benefits the supplier and possibly also the retailer if the holding cost is sufficiently low (due to the contract-space-expansion effect). Is such a move beneficial for the supply chain agents in the presence of process improvement efforts? Such efforts—initiated by suppliers—ultimately reduce production cost and may translate into lower wholesale prices as well as lower consumer prices. We find that strategic inventories may stimulate investment in process improvement when the holding cost is high (as it encourages the supplier to further reduce future cost to eliminate the need for strategic inventories), but may suppress such investment when the holding cost is low (as strategic inventories are cheap to stock and hence cannot be eliminated). Our key result, contrary to the existing literature, is that strategic inventories may be harmful to both supply chain agents in the presence of process improvement. In that case, the supplier effectively over-invests in process improvement efforts, inducing the retailer to reduce the stock of strategic inventories, while reversing the benefits of the contract-space-expansion effect. We also consider variations to the model, whereby the supplier may delay his investment decision, the holding cost may be a function of the wholesale price set by the supplier, consumers may behave strategically, and the planning horizon may consist of multiple periods. [less ▲]

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See detailModeling time-dependent randomness in stochastic dual dynamic programming
Löhndorf, Nils UL; Shapiro, Alexander

in European Journal of Operational Research (2019), 273(2), 650--661

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See detailJoint signature of two or more systems with applications to multistate systems made up of two-state components
Marichal, Jean-Luc UL; Mathonet, Pierre; Navarro, Jorge et al

in European Journal of Operational Research (2017), 263(2), 559-570

The structure signature of a system made up of n components having continuous and i.i.d. lifetimes was defined in the eighties by Samaniego as the n-tuple whose k-th coordinate is the probability that the ... [more ▼]

The structure signature of a system made up of n components having continuous and i.i.d. lifetimes was defined in the eighties by Samaniego as the n-tuple whose k-th coordinate is the probability that the k-th component failure causes the system to fail. More recently, a bivariate version of this concept was considered as follows. The joint structure signature of a pair of systems built on a common set of components having continuous and i.i.d. lifetimes is a square matrix of order n whose (k,l)-entry is the probability that the k-th failure causes the first system to fail and the l-th failure causes the second system to fail. This concept was successfully used to derive a signature-based decomposition of the joint reliability of the two systems. In the first part of this paper we provide an explicit formula to compute the joint structure signature of two or more systems and extend this formula to the general non-i.i.d. case, assuming only that the distribution of the component lifetimes has no ties. We also provide and discuss a necessary and sufficient condition on this distribution for the joint reliability of the systems to have a signature-based decomposition. In the second part of this paper we show how our results can be efficiently applied to the investigation of the reliability and signature of multistate systems made up of two-state components. The key observation is that the structure function of such a multistate system can always be additively decomposed into a sum of classical structure functions. Considering a multistate system then reduces to considering simultaneously several two-state systems. [less ▲]

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See detailStrategic inventories with quality deterioration
Mantin, Benny UL; Jiang, Lifei

in European Journal of Operational Research (2017), 258(1), 155-164

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See detailA multi-item approach to repairable stocking and expediting in a fluctuating demand environment
Arts, Joachim UL

in European Journal of Operational Research (2017), 256(1), 102-115

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See detailPayload-based fleet optimization for rail cars in the chemical industry
Kallrath, J.; Klosterhalfen, Steffen UL; Walter, M. et al

in European Journal of Operational Research (2017), 259(1), 113-129

Rail car fleets are significant investments in the chemical industry. Therefore, chemical companies constantly try to optimize the fleets as part of major working capital optimization initiatives. We ... [more ▼]

Rail car fleets are significant investments in the chemical industry. Therefore, chemical companies constantly try to optimize the fleets as part of major working capital optimization initiatives. We study a complex rail car fleet optimization problem observed at BASF and an approach to tackle the problem in a sequential way. We develop a mixed integer non-linear programming model to derive suggestions to the questions: (i) How many different rail car sizes in terms of volume are appropriate and what are their optimal volumes? and (ii) For each volume, what is the optimal number of rail cars of this size? The model formulation takes into account various real-world restrictions concerning the volume and weight of the rail cars as well as the tracks that they run on. We propose two solution methods. First, we reformulate the non-linear terms, which results in a mixed integer linear programming (MILP) model. This model can be solved in a reasonable amount of time, if the number of different rail car sizes is small (2 or 3). Second, we develop a two-step approach that uses an enumeration scheme in the first stage to find good initial solutions that are fed into the MILP formulation in the second stage. This approach solves the model for larger numbers of different rail car sizes (4 or 5). Through the fleet redesign BASF has realized cost savings of nearly 2 million euros so far. [less ▲]

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See detailAn empirical analysis of scenario generation methods for stochastic optimization
Löhndorf, Nils UL

in European Journal of Operational Research (2016), 255(1), 121--132

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See detailCarbon capture and storage and transboundary pollution: A differential game approach
Bertinelli, Luisito UL; Camacho, Carmen; Zou, Benteng UL

in European Journal of Operational Research (2014)

We study the strategic behavior of two countries facing transboundary CO2 pollution under a differential game setting. In our model, the reduction of CO2 concentration occurs through the carbon capture ... [more ▼]

We study the strategic behavior of two countries facing transboundary CO2 pollution under a differential game setting. In our model, the reduction of CO2 concentration occurs through the carbon capture and storage process, rather than through the adoption of cleaner technologies. Furthermore, we first provide the explicit short-run dynamics for this dynamic game with symmetric open-loop and a special Markovian Nash strategy. Then, we compare these strategies at the games’ steady states and along some balanced growth paths. Our results show that if the initial level of CO2 is relatively high, state dependent emissions reductions can lead to higher overall environmental quality, hence, feedback strategy leads to less social waste. [less ▲]

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See detailAnalysis of a two-echelon inventory system with two supply modes
Arts, Joachim UL; Kiesmüller, G. P.

in European Journal of Operational Research (2013), 225(2), 263-272

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See detailAn Integrated Guaranteed- and Stochastic-Service Approach to Inventory Optimization in Supply Chains
Klosterhalfen, Steffen UL; Dittmar, Daniel; Minner, Stefan

in European Journal of Operational Research (2013), 231

Multi-echelon inventory optimization literature distinguishes stochastic- (SS) and guaranteed-service (GS) approaches as mutually exclusive frameworks. While the GS approach considers flexibility measures ... [more ▼]

Multi-echelon inventory optimization literature distinguishes stochastic- (SS) and guaranteed-service (GS) approaches as mutually exclusive frameworks. While the GS approach considers flexibility measures at the stages to deal with stockouts, the SS approach only relies on safety stock. Within a supply chain, flexibility levels might differ between stages rendering them appropriate candidates for one approach or the other. The existing approaches, however, require the selection of a single framework for the entire supply chain instead of a stage-wise choice. We develop an integrated hybrid-service (HS) approach which endogenously determines the overall cost-optimal approach for each stage and computes the required inventory levels. We present a dynamic programming optimization algorithm for serial supply chains that partitions the entire system into subchains of different types. From a numerical study we find that, besides implicitly choosing the better of the two pure frameworks, whose cost differences can be considerable, the HS approach enables additional pipeline and on-hand stock cost savings. We further identify drivers for the preferability of the HS approach. [less ▲]

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See detailWeighted Banzhaf power and interaction indexes through weighted approximations of games
Marichal, Jean-Luc UL; Mathonet, Pierre UL

in European Journal of Operational Research (2011), 211(2), 352-358

The Banzhaf power index was introduced in cooperative game theory to measure the real power of players in a game. The Banzhaf interaction index was then proposed to measure the interaction degree inside ... [more ▼]

The Banzhaf power index was introduced in cooperative game theory to measure the real power of players in a game. The Banzhaf interaction index was then proposed to measure the interaction degree inside coalitions of players. It was shown that the power and interaction indexes can be obtained as solutions of a standard least squares approximation problem for pseudo-Boolean functions. Considering certain weighted versions of this approximation problem, we define a class of weighted interaction indexes that generalize the Banzhaf interaction index. We show that these indexes define a subclass of the family of probabilistic interaction indexes and study their most important properties. Finally, we give an interpretation of the Banzhaf and Shapley interaction indexes as centers of mass of this subclass of interaction indexes. [less ▲]

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See detailOn the dynamics of capital accumulation across space
Camacho, Carmen; Zou, Benteng UL; Briani, Maya

in European Journal of Operational Research (2008), 186(2), 451-465

We solve an optimal growth model in continuous space, continuous and bounded time. The optimizer chooses the optimal trajectories of capital and consumption across space and time by maximizing an ... [more ▼]

We solve an optimal growth model in continuous space, continuous and bounded time. The optimizer chooses the optimal trajectories of capital and consumption across space and time by maximizing an objective function with both space and time discounting. We extract the corresponding Pontryagin conditions and prove their sufficiency. We end up with a system of two parabolic differential equations with the corresponding boundary conditions. We propose a simple numerical set-up to simulate PDE systems which we employ to study the roles of initial capital and technology distributions over space in various scenarios. [less ▲]

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See detailOR and the management of electronic services - EURO'2004
Bisdorff, Raymond UL; Meyer, P.; Siskos, Y.

in European Journal of Operational Research (2008), 187(3), 1293-1295

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See detailEntropy of bi-capacities
Kojadinovic, Ivan; Marichal, Jean-Luc UL

in European Journal of Operational Research (2007), 178(1), 168-184

In the context of multicriteria decision making whose aggregation process is based on the Choquet integral, bi-capacities can be regarded as a natural extension of capacities when the underlying ... [more ▼]

In the context of multicriteria decision making whose aggregation process is based on the Choquet integral, bi-capacities can be regarded as a natural extension of capacities when the underlying evaluation scale is bipolar. The notion of entropy, recently generalized to capacities to measure their uniformity, is now extended to bi-capacities. We show that the resulting entropy measure has a very natural interpretation in terms of the Choquet integral and satisfies many natural properties that one would expect from an entropy measure. [less ▲]

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See detailk-intolerant capacities and Choquet integrals
Marichal, Jean-Luc UL

in European Journal of Operational Research (2007), 177(3), 1453-1468

We define an aggregation function to be (at most) k-intolerant if it is bounded from above by its kth lowest input value. Applying this definition to the discrete Choquet integral and its underlying ... [more ▼]

We define an aggregation function to be (at most) k-intolerant if it is bounded from above by its kth lowest input value. Applying this definition to the discrete Choquet integral and its underlying capacity, we introduce the concept of k-intolerant capacities which, when varying k from 1 to n, cover all the possible capacities on n objects. Just as the concepts of k-additive capacities and p-symmetric capacities have been previously introduced essentially to overcome the problem of computational complexity of capacities, k-intolerant capacities are proposed here for the same purpose but also for dealing with intolerant or tolerant behaviors of aggregation. We also introduce axiomatically indices to appraise the extent to which a given capacity is k-intolerant and we apply them on a particular recruiting problem. [less ▲]

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