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Data mining Aided Proficient approach for optimal inventory control in supply chain management

Data mining Aided Proficient approach for optimal inventory control in supply chain management

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Published by ijcsis
Optimal inventory control is one of the significant tasks in supply chain management. The optimal inventory control methodologies intend to reduce the supply chain (SC) cost by controlling the inventory in an effective manner, such that, the SC members will not be affected by surplus as well as shortage of inventory. In this paper, we propose an efficient approach that effectively utilizes the data mining concepts as well as genetic algorithm for optimal inventory control. The proposed approach consists of two major functions, mining association rules for inventory and selecting SC cost-impact rules. Firstly, the association rules are mined from EMA-based inventory data, which is determined from the original historical data. Apriori, a classic data mining algorithm is utilized for mining association rules from EMA-based inventory data. Secondly, with the aid of genetic algorithm, SC cost-impact rules are selected for every SC member. The obtained SC cost-impact rules will possibly signify the future state of inventory in any SC member. Moreover, the level of holding or reducing the inventory can be determined from the SC cost-impact rules. Thus, the SC cost-impact rules that are derived using the proposed approach greatly facilitate optimal inventory control and hence make the supply chain management more effective.
Optimal inventory control is one of the significant tasks in supply chain management. The optimal inventory control methodologies intend to reduce the supply chain (SC) cost by controlling the inventory in an effective manner, such that, the SC members will not be affected by surplus as well as shortage of inventory. In this paper, we propose an efficient approach that effectively utilizes the data mining concepts as well as genetic algorithm for optimal inventory control. The proposed approach consists of two major functions, mining association rules for inventory and selecting SC cost-impact rules. Firstly, the association rules are mined from EMA-based inventory data, which is determined from the original historical data. Apriori, a classic data mining algorithm is utilized for mining association rules from EMA-based inventory data. Secondly, with the aid of genetic algorithm, SC cost-impact rules are selected for every SC member. The obtained SC cost-impact rules will possibly signify the future state of inventory in any SC member. Moreover, the level of holding or reducing the inventory can be determined from the SC cost-impact rules. Thus, the SC cost-impact rules that are derived using the proposed approach greatly facilitate optimal inventory control and hence make the supply chain management more effective.

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Data mining Aided Proficient approach for optimalinventory control in supply chain management
Chitriki Thotappa
Assistant Professor, Department of Mechanical Engineering,Proudadevaraya Institute of Technology, Hospet.Visvesvaraya Technological University, Karnataka, Indiathotappa@gmail.com
Dr. Karnam Ravindranath
PrincipalAnnamacharya Institute of Technology, Tirupatikravi1949@yahoo.com
 Abstract—
Optimal inventory control is one of the significanttasks in supply chain management. The optimal inventorycontrol methodologies intend to reduce the supply chain (SC) costby controlling the inventory in an effective manner, such that, theSC members will not be affected by surplus as well as shortage of inventory. In this paper, we propose an efficient approach thateffectively utilizes the data mining concepts as well as geneticalgorithm for optimal inventory control. The proposed approachconsists of two major functions, mining association rules forinventory and selecting SC cost-impact rules. Firstly, theassociation rules are mined from EMA-based inventory data,which is determined from the original historical data. Apriori, aclassic data mining algorithm is utilized for mining associationrules from EMA-based inventory data. Secondly, with the aid of genetic algorithm, SC cost-impact rules are selected for every SCmember. The obtained SC cost-impact rules will possibly signifythe future state of inventory in any SC member. Moreover, thelevel of holding or reducing the inventory can be determinedfrom the SC cost-impact rules. Thus, the SC cost-impact rulesthat are derived using the proposed approach greatly facilitateoptimal inventory control and hence make the supply chainmanagement more effective.
 Keywords-SC cost; SC cost-impact rule; EMA-based inventory; Apriori; Genetic Algorithm (GA).
 
I.
 
I
NTRODUCTION
 Nowadays, supply chains are at the center stage of business performance of manufacturing and service enterprises[5]. A SC consists of all parties involved directly or indirectlyand in satisfying a customer request. It includes suppliers,manufacturers, distributors, warehouses, retailers and evencustomers themselves [6]. Because of the intrinsic complexityof decision making in supply chains, there is a growing needfor modeling methodologies, which help to identify andinnovate strategies for designing high performance SCnetworks [5]. Research on supply chains makes an attractivefield of study, offering several approach roads toorganizational integration processes. Some of the problems areconsidered as most important, which canalize research projectin the area of supply chains that are related to demandvariability and demand distortion throughout the SC [7].Modern supply chains are highly complex and dynamic; thenumber of facilities, the number of echelons, and the structureof material and information flow contribute to the complexityof the SC [9]. In addition, increases in the uncertainties insupply and demand, globalization, reduction in product andtechnology life cycles, and the use of outsourcing inmanufacturing, distribution and logistics resulting in morecomplex supply networks, can lead to higher exposure to risksin the SC [8].The ultimate goal of every SC is to maximize the overallvalue generated by the chain, which depends on the ability of the organization to fulfill customer orders faster and moreefficiently [9]. While the separation of SC activities amongdifferent companies enables specialization and economies of scale, many important issues and problems need to be resolvedfor a successful SC operation which is the main purpose of supply chain management (SCM) [14]. SCM is a traditionalmanagement tool [1] which has attracted increasing attentionin the academic community and in companies looking forpractical ways to improve their competitive position in theglobal market [4]. SCM is an integrated approach to plan andcontrol materials and information flows [3]. Successful SCMincorporates extensive coordination among multiple functionsand independent companies working together to deliver aproduct or service to end consumers [2]. Inventory control hasbeen considered as a vital problem in the SCM for severaldecades [10].Inventory is defined as the collection of items stored by anenterprise for future use and a set of procedures calledinventory systems assist in examination and control of theinventory. The inventory system supports the estimation of amount of each item to be stored, when the low items shouldbe restocked and the number of items that must be ordered ormanufactured as soon as restocking becomes essential. The SCcost was hugely influenced by the overload or shortage of inventories [11]. Since inventory is one of the major factorsthat affect the performance of SC system, the effectivereduction of inventory can substantially reduce the cost levelof the total SC [13]. Thus, inventory optimization hasemerged as one of the most recent topics as far as SCM isconsidered [11]. Inventory optimization application organizesthe latest techniques and technologies, thereby assisting theenhancement of inventory control and its management acrossan extended supply network. Some of the design objectives of inventory optimization are to optimize inventory strategies,and thus used in enhancing customer service, reducing leadtimes and costs and meeting market demand [11].
(IJCSIS) International Journal of Computer Science and Information Security,Vol. 8, No. 2, May 201043http://sites.google.com/site/ijcsis/ISSN 1947-5500
 
Under the influence of the SCM, conventional inventorycontrol theories and methods are no longer adapted to the newenvironment [12]. The optimal inventory controlmethodologies intended to reduce the SC cost in the SCnetwork. They minimize the SC cost by controlling theinventory in an optimal manner and so that the SC memberswill not be affected by surplus as well as shortage of inventory. In order to control the inventory in an optimalmanner, we propose an efficient approach with the effectiveutilization of data mining concepts as well as GA. The rest of the paper is organized as follows. Section II gives a brief introduction about the data mining and generating associationrules using Apriori and Section III reviews some of the recentrelated works. Section IV details the proposed approach foroptimal inventory control with required mathematicalformulations. Section V discusses about the implementationresults and Section VI concludes the paper.II.
 
D
ATA MINING
 Data mining is one of the newly emerging fields, which isconcerning the three worlds of Databases, ArtificialIntelligence and Statistics. The information age has enabledseveral organizations in order to gather huge volumes of data.But, the utility of this data is negligible if “meaningfulinformation” or “knowledge” cannot be extracted from it [15].Data mining has been emerging as an effective solution toanalyze and extract hidden potential information from hugevolume of data. The term data mining is used for techniquesand algorithms that allow analyzing data in order to determinerules and patterns describing the characteristic properties of that particular data. [21].Usually, data mining tasks can be categorized into eitherprediction or description [18]. Clustering, Association RuleMining (ARM) [19] and Sequential pattern mining are fewdescriptive mining techniques. The predictive miningtechniques involve tasks like Classification [20], Regressionand Deviation detection [34]. Data mining is utilized in boththe private and public sectors. Data mining is usually used bybusiness intelligence organizations, financial analysts and alsoused for healthcare management or medical diagnosis toextract information from the enormous data sets generated bymodern experimental and observational methods [16] [17].Generally, Data mining is used to extract interestingknowledge that can be represented in several varioustechniques such as clusters, decision trees, decision rules andmuch more. In these, association rules have been proved to beeffective in identifying interesting relations in massive dataquantities [25]. Association Rule Mining (ARM), initiallyintroduced by Agrawal et al. [35], is a well-known data miningresearch field [24]. ARM correlates a set of items with othersets of items in a database [23]. It aspires to mine interestingcorrelations, frequent patterns, associations or casualstructures among sets of items in the transaction databases orother data repositories [22]. ARM has a extensive range of applications in the fields of Market basket analysis, Medicaldiagnosis/ research, Website navigation analysis, Homelandsecurity and so on [26]. ARM is to identify the associationrule which satisfies the pre- defined minimum support andconfidence from a given database. Association rule mining is atwo step process [27]:
 
Finding those itemsets whose occurrences exceed apredefined threshold in the database, these itemsets arecalled frequent or large itemsets.
 
Generating association rules from those large itemsetswith the constraints of minimal confidence.The basic problem in mining association rules is miningfrequent itemsets [30]. Frequent item set mining problem hasreceived a great deal of attention [28] from its introduction in1993 by Agarwal et al [35]. Frequent item sets play ansignificant role in several data mining tasks that tries todetermine interesting patterns from databases, such asassociation rules, correlations, sequences, episodes, classifiers,clusters and much more [29]. There have been several variousalgorithms developed for mining of frequent patterns, whichcan be classified into two categories. The first category,candidate-generation-and test approach, such as Apriori andsecond category of methods includes FP-growth and TreeProjection [30].Apriori is one of the most popular data mining approachesfor determining frequent itemsets from transactional datasets.The Apriori algorithm is the key basis of several other well-known algorithms and implementations [31]. The Apriorialgorithm uses two values for rule construction: 1.) a supportvalue and 2.) a confidence value. Depending on the setting of each index threshold, the search space can be reduced, or thecandidate number of association rules can be increased.However, experience is necessary for setting an effectivethreshold [32]. The basic idea of Apriori algorithm is togenerate a specific size of the candidate projects set, and thenscan the database time’s line counts, to determine whether thecandidate frequent item sets [33].III.
 
R
ELATED
W
ORKS
 Some of the recent research works available in theliterature are described in this section. A. L. Symeonidis et al.,[36] have introduced a successful paradigm for couplingIntelligent Agent technology with Data Mining. Consideringthe state-of-the-art Multi-Agent Systems (MAS) developmentand SCM evaluation practices, they have proposed amethodology to identify the appropriate metrics for DM-enhanced MAS for SCM and used those metrics to evaluate itsperformance. They have also provided an extensive analysis of the methods in which DM could be employed to improve theintelligence of an agent, agent Mertacor. A number of metricswere applied to evaluate their results before incorporating theselected model with their agent. Their mechanism proved thattheir agent was capable of increasing its revenue by adjustingits bidding strategy.Steven Prestwich et al. [37] have described a simple re-sampling technique called Greedy Average Sampling forsteady-state GAs such as GENITOR. It requires an extraruntime parameter to be tuned, but does not need a largepopulation or assumptions on noise distributions. Whileexperimented on a well-known Inventory Control problem, itperformed a large number of samples on the best
(IJCSIS) International Journal of Computer Science and Information Security,Vol. 8, No. 2, May 201044http://sites.google.com/site/ijcsis/ISSN 1947-5500
 
chromosomes yet only a small number on average, and wasmore effective than the other four tested techniques.Mouhib Al-Noukari et al [38] have explained a datamining application in car manufacturing domain andexperimented it. Their application results demonstrated thecapability of data mining techniques in providing importantanalysis such as launch analysis and slow turning analysis.Such analysis helped in providing car market with base formore accurate prediction of future market demand.Tao Ku et al. [39] have presented a complex event miningnetwork (CEMN) and defined the fundamentals of radio-frequency identification (RFID)-enabled SC eventmanagement. Also, they have discussed how a complex eventprocessing (CEP) could be used to resolve the underlyingarchitecture challenges and complexities of integrating real-time decision support into the supply chain. Finally, adistributed complex event detection algorithm based onmaster-workers pattern was proposed to detect complex eventsand trigger correlation actions. Their results showed that theirapproach was more robust and scaleable in large-scale RFIDapplication.Se Hun Lim [40] has developed a control model of SCMsustainable collaboration using Decision Tree Algorithms(DTA). He has used logistic regression analysis (LRA) andmultivariate determinate analysis (MDA) as a benchmark andcompared the performance of forecasting SCM sustainablecollaboration through three types of models LRA, MDA,DTA. Forecasting SCM sustainable collaboration using DTAwas considered as the most outstanding feature. The obtainedresult has provided useful information of SCM sustainablecollaboration determining factors in the manufacturing anddistributing companies.Shu-Hsien Liao et al. [41] have investigated functionalitiesthat best fit the consumer’s needs and wants for life insuranceproducts by extracting specific knowledge patterns and rulesfrom consumers and their demand chain. They have used theapriori algorithm and clustering analysis as methodologies fordata mining. Knowledge extraction from data mining resultswas illustrated as market segments and demand chain analysison life insurance market in Taiwan in order to proposesuggestions and solutions to the insurance firms for newproduct development and marketing.Xu Xu et al. [42] have proposed an approach thatcombines expert domain knowledge with Apriori algorithm todiscover the pattern of supplier under the methodology of Domain-Driven Data Mining (D3M). Apriori algorithm of data mining with the help of Intuitionistic Fuzzy Set Theory(IFST) was employed during the process of mining. Theobtained overall patterns help in deciding the final selection of suppliers. Finally, AHP was used to efficiently tackle bothquantitative and qualitative decision factors involved inranking of suppliers with the help of achieved pattern. Anexample searching for pattern of supplier was used todemonstrate the effective implementation procedure of theirmethod. Their method could provide the guidelines for thedecision makers to effectively select their suppliers in thecurrent competitive business scenario.IV.
 
T
HE
P
ROPOSED
A
PPROACH FOR OPTIMAL INVENTORYCONTROL
 In the proposed approach for optimal inventory control,two major functions are included, namely, association rulesmining for inventory and recognizing optimal inventory rulesto be maintained. Prior to perform the two aforesaid functions,a database of historical data has to be maintained. Thedatabase holds the historical record of inventory over
 p
 N 
 periods in
s
 N 
SC members, say,
SP
 N ij
 I 
×
][;10
P
 N i
 and 10
S
 N  j
. Initially, the Exponential MovingAverage (EMA) is determined for the historical data asfollows
)(
)(
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 I  I  I 
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)1(0
+
n N l
P
(1)where,
>=
=
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niijema prev
 jllj
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10
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(2)The EMA values of the original historical data for
n N 
P
 periods,
SPlj
n N ema
 I 
×
)(
][ from (1), where,)1 /(2
+=
n
α 
(termed as constant smoothing factor), issubjected for a decision making process as follows
>=<=
 II;  II;  II; 
themathemathema'
ljljlj
excessbalanceshortage I 
lj
ema
(3)As given above, EMA-based inventory data
SPlj
n N ema
 I 
×
)('
][ is obtained in which the originalhistorical data is converted into three different states of inventory which include shortage, balance and excess.Subsequently, the association rules for inventory are minedfrom the previously obtained EMA-based inventory data.
 A. Mining Association rules for inventory using Apriori
One of the two major functions of the approach, miningassociation rules for inventory is described in the sub-section.Mining the association rules for inventory is to find therelationship between the inventories of the SC members. In theproposed approach, we utilize Apriori, a classic algorithm forlearning the association rules. Let,
' ' ' ' 
,,,,
321
SlN lll
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 I  I  I 
L
be the itemset taken fromthe EMA-based inventory data
SPlj
 N n N ema
 I 
×
)('
. The itemset
(IJCSIS) International Journal of Computer Science and Information Security,Vol. 8, No. 2, May 201045http://sites.google.com/site/ijcsis/ISSN 1947-5500

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