The encyclopedia · Engineering & Operations · Operational decision · 2021–2024
Volkswagen used Monte Carlo plus a knapsack model to choose supplier fixes.
VW Group Logistics combined Monte Carlo simulation with a knapsack model to pick which suppliers to develop, cutting disruption-driven extra tours.
Volkswagen Group
the move
Volkswagen Group Logistics pulls parts from many suppliers, so a disruption at one can force extra tours to keep plants supplied.
Researchers combined a Monte Carlo simulation of disruption effects across the supplier network with a knapsack model that allocates supplier-development measures to reduce the resulting extra-tour cost.
The approach was published as an application using real Volkswagen data on 18 less-than-truckload networks.
why it works
- Disruption in one supplier raises cost across the network
- Monte Carlo simulates the knock-on effects of a failure
- A knapsack model picks the few fixes with the biggest effect
- Studied on 18 real Volkswagen less-than-truckload networks
what transfers
When you cannot fix every supplier, simulate the disruption risk of the network and let a knapsack model choose the few improvements that most reduce extra cost.
what came after
The method gives Volkswagen a systematic way to target supplier-development dollars at the network points where they most reduce disruption cost, rather than treating each supplier separately.
references
- Volkswagen Group Logistics Applies Operations Research to Optimize Supplier Development
- Volkswagen Group Logistics Applies Operations Research to Optimize Supplier Development
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