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Review Article
Operations Management of Logistics and Supply Chain:
Issues and Directions
Xiang Li
College of Economic and Social Development, Nankai University, Tianjin 300071, China
Correspondence should be addressed to Xiang Li; xiangli@nankai.edu.cn
Received 11 April 2014; Accepted 13 May 2014; Published 10 June 2014
Academic Editor: Xiaochen Sun
Copyright © 2014 Xiang Li. is is an open access article distributed under the Creative Commons Attribution License, which
permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
ere has been consensus that logistics as well as supply chain management is a vital research eld, yet with few literature reviews
on this topic. is paper sets out to propose some hot issues in the current research, through a review of related literature from the
perspective of operations management. In addition, we generate some insights and future research directions in this eld.
1. Introduction
Organizations adopt numerous business improvement
methodologies to improve business performance. Logistics
as well as supply chain management has been regarded to be
the crucial factor for the companies to obtain competitive
edge. In fact, logistics as well as supply chain management
has received attention since the early 1980s, yet conceptually
the management of supply chains is not particularly well
understood, and many authors have highlighted the necessity
of clear denitional constructs and conceptual frameworks
on supply chain management. In this paper, we provide a
tutorial on the current research of operations management of
logistics and supply chain. We rst clarify the conception of
logistics and supply chain management in this paper, which
denes the scope of our related research papers. e core of
this paper is that we provide several hot issues in this eld
with examples to show how these researches contribute from
dierent research angles. Finally, we conclude the paper with
the insights obtained from our analysis and future study
directions in this eld.
e paper is organized as follows. In the next section, we
specify the denitions of the terms of logistics and supply
chainusedinourpaper,withacomparisonbetweenthesetwo
popular conceptions. In Section 3, which is the core section of
this paper, we provide several hot topics in current research
with detailed examples. In Section 4,weprovideinsightsand
further research directions.
2. Conception and Scope
2.1. Logistics. Logistics is the management of the ow of
goods between the point of origin and the point of consump-
tion in order to meet some requirements, for example, of cus-
tomers or corporations. e resources managed in logistics
can include physical items, such as food, materials, animals,
equipment, and liquids, as well as abstract items, such as time,
information, particles, and energy. e logistics of physical
items usually involves the integration of information ow,
material handling, production, packaging, inventory, trans-
portation, warehousing, and oen security. e complexity of
logistics can be modeled, analyzed, visualized, and optimized
by dedicated simulation soware. e minimization of the
use of resources is a common motivation in logistics for
import and export.
Note that the above denition of logistics is not uni-
ed, although it might be indeed, in current environment,
a commonly acknowledged one. For example, Council of
Logistics Management (now renamed as Council of Supply
Chain Management Professionals) referred to logistics as “the
process of planning, implementing, and controlling the ecient,
eective ow and storage of goods, services, and related
information from point of origin to point of consumption for
the purpose of conforming to customer requirements,” w h i c h
includes inbound, outbound, internal, and external move-
ments and return of materials for environmental purposes.
Hindawi Publishing Corporation
Discrete Dynamics in Nature and Society
Volume 2014, Article ID 701938, 7 pages
http://dx.doi.org/10.1155/2014/701938
2 Discrete Dynamics in Nature and Society
Aswecansee,theconceptoflogisticsfocusesontheprod-
uct ow, which is the meaning by which this word has been
translated in Chinese. It also puts emphasis on the activities of
handling product, which include the storage, transportation,
distribution, and packaging and processing. Although busi-
ness logistics involves many activities, the traditional research
of operations management on logistics mainly relates to
the elds of logistics facility, transportation, and inventory
planning.
2.2. Supply Chain. Compared to “logistics,” there appears
to be even less consensus on the denition of the term
“supply chain management.” Kathawala and Abdou [1]point
out that SCM “has been poorly dened and there is a high
degree of variability in people’s minds about what is meant.”
Nevertheless, we present a rather widely adopted denition,
which is given by Mentzer et al. [2]whichisratherbroad,
not conned to any specic discipline area, and adequately
reecting the breadth of issues that are usually covered
under this term: “Supply chain management is dened as
the systemic, strategic coordination of the traditional business
functions and the tactics across these business functions within
a particular company and across businesses within the supply
chain, for the purposes of improving the long-term performance
of the individual companies and the supply chain as a whole.”
e terms of “logistics” and “supply chain” are usually
comparative in academy and industry, since both of them are
closely relevant to the product circulation during its whole
lifecycle,andbothhavebeenregardedasthecentralunitof
competitive analysis of model management science. Gener-
ally speaking, supply chain is a more broadened conception
with a wider range which can involve other similar subjects,
such as network sourcing, supply pipeline management, value
chain management, and value stream management [3–5].
In addition, we can see that the conception of logistics has
no relationship with organization, which is the opposite of
supply chain, since supply chain is made up of multiple orga-
nizations, usually companies. An important issue in supply
chain management is that companies will not seek to achieve
cost reductions or prot improvement at the expense of their
supply chain partners but rather seek to make the supply
chain as a whole more competitive. Hence, the contention
that it is supply chains, and not a single company, that
compete is a central tenet in the eld of supply chain man-
agement [6]. A central research metho dology for supply chain
management is game theory (and also incentive theory for the
scenario of incomplete information).
3. Hot Issues
Due to the extensive research ranges in operations manage-
ment of logistics and supply chain management, we cannot
possibly make a comprehensive review in one paper. In this
section, we point out several of the most important issues
and hot topics in recent research, which draws great attention
from both academy and industry.
3.1. Inventory and Transportation Management on Specic
Fields. As has been pointed out in the previous section,
theoperationsresearchonlogisticsmanagementstillmainly
focuses on the traditional domain, that is, the inventory
(including production planning) and transportation manage-
ment. However, a noticeable phenomenon is that most papers
are putting emphasis on specic elds with remarkable fea-
tures captured into their models and thus making new con-
tributions to the literature.
For example, the inventory management of perishable
products (also referred to as deteriorating product) is a rather
old and mature eld in logistics and supply chain manage-
ment, with replenishment policies for inventory being the
main focus of study. Whitin [7] investigated such a problem,
where fashion goods deteriorating at the end of certain
storage periods were considered. Since then, considerable
attention has been paid to this line of research. Nahmias
[8] provides a comprehensive survey of research published
before the 1980s. Studies in recent years on the deteriorating
inventory models can be found in Raafat [9] and Goyal and
Giri’s [10] papers, in which relevant literature published in the
1980s and 1990s is reviewed, respectively. A more updated
review is given in Blackburn and Scudder’s [11]paper.How-
ever, new models can still be developed to capture the current
management feature and obtain new managerial insights.
Generally, two types of perishable loss, quantity loss and
quality loss, may take place for a perishable product. e
majority of the literature has dealt mainly with only one
typeofloss.Inthisregard,Caietal.[12]adoptastochastic
modeltostudyasupplychaininwhichadistributorprocures
from a producer a quantity of a fresh product. During the
transportation process, the distributor has to make an appro-
priate eort to preserve the freshness of the product, and his
success in this respect impacts both the quality and quantity
of the product delivered to the market. Cai et al. [13]further
extend the model into a 3-stage supply chain with outsourcing
transportation involved.
Another important eld is transportation. It is generally
known that the research on VRP (vehicle routing problem)
and its various extensions has been extensive. However,
other new domains on transportation can still be interesting
topics. For example, the remarkable growth in intermodal
transportation over the past decade has not been matched
by a comparable level of academic activity, and, hence, the
research on intermodal transportation appears to have a great
potential. Chang [14] explores one of the intermodal opera-
tional issues: how to select best routes for shipments through
the international intermodal network. e problem is for-
mulated as a multiobjective multimodal multicommodity
ow problem with time windows and concave costs, and an
ecient heuristic is proposed. Vermaa and Verter [15]present
a rst attempt for the development of an analytical frame-
work for planning rail-truck intermodal transportation of
hazardous materials by developing a biobjective optimization
model to plan and manage intermodal shipments to represent
the current practice; the routing decisions in the model are
driven by the delivery times specied by the customers.
Bruns and Knust [16]studytheproblemofloadplanning
for trains in intermodal container terminals. e objective
is to assign load units to wagons of a train such that
the utilization of the train is maximized and setup and
Discrete Dynamics in Nature and Society 3
transportation costs in the terminal are minimized. Bruns et
al. [17] further study the problem of robust load planning
for trains in intermodal container terminals. e goal of
load planning is to choose wagon settings and assign load
units to wagons of a train such that the utilization of the
train is maximized and setup and transportation costs in the
terminal are minimized. Garc´
ıa et al. [18]adoptanewhybrid
approach by combining OR techniques with AI search meth-
ods in order to obtain good quality solutions for complex
intermodal transport problems, by exploiting the benets
of both kinds of techniques. e solution has been applied
to a real-world problem from one of the largest Spanish
companies using intermodal transportation.
3.2. Sourcing and Marketing in Supply Chain. Sourcing is the
rst step in a supply chain. e research on sourcing has
been extensive in recent years. is leaves open room for a
supplier to improve eciency over time by further optimizing
the production processes. In general, OEMs’ shiing of more
development and engineering work, which require complex
tasks and customized products, to their suppliers implies a
signicant potential for a supplier to accumulate knowledge
and experience from learning, thus reducing costs over time
[19–21]. is dynamic change of supply costs aects the
negotiation of sourcing contracts.
A noticeable issue is the utilization of auctioning in the
sourcing strategy. One of the rst researches in this regard
might be Chen’s [22], which studies a procurement problem
with one buyer and multiple potential suppliers who hold
private information about their own production costs. An
optimal procurement strategy is considered for the buyer who
rst species a payment for each possible purchase quantity
andtheninvitesthesupplierstobidforthiscontract.e
auctioncanbeconductedinmanyformatssuchastheEnglish
auction, the Dutch auction, the rst-priced auction, sealed-
bidauction,andtheVickreyauction.ChenandVulcano[23]
study a supply chain where an upstream supplier auctions
his inventory or capacity as a bundle, which formulates the
problem as a two-stage supply chain comprising a single
supplier and two resellers. Huh and Janakiraman [24]study
periodic-review inventory replenishment problems with auc-
tions and other sales channels and show that the optimality of
(s, S) inventory replenishment policies extends well beyond
the traditional sales environments studied so far in the
inventory literature. Chen et al. [25,26] study a supply chain
in which a single buyer wishes to procure a package of
products or services from various competing suppliers that
possess private cost information and show how the buyer
can optimize his/her prot and at the same time coordinate
the channel by using a contract scheme involving auctions,
audits, and prot sharing.
For a supplier that provides critical and customized
components, the demand closely depends on, and hence is
susceptible to, the variation of the nal product demand. In
the automotive industry, unstable and uncertain domestic
volume of individual models is cited as one of the biggest
challengesfacedbymanufacturersduetoincreasedconsumer
choices [27]. e consumer electronics industry is notorious
for risk stemming from short product life cycles and high
demand uncertainty [28]. Furthermore, there is typically
moreuncertaintyaboutthefuturedemandthanaboutthe
current demand. is demand uncertainty adds another
source of future uncertainty, besides possible supplier switch-
ing (in a short-term relationship), that inuences the decision
of initial capacity investment.
Marketing is another end in supply chain. e collabora-
tion with marketing science massively extends the domain of
supply chain management. Pricing, promotion, and channel
management are the three most important areas in this
regard. Pricing and promotion are the central issues in mar-
keting management, let alone under consideration of the sup-
ply chain environment. Li and Graves [29] explore the pricing
decisions during intergenerational product transition, by
formulating the dynamic pricing problem and deriving the
optimalpricesforboththeoldandnewproducts.eoptimal
initial inventory for each product is also determined, and a
heuristic method is discussed. Li and Zhang [30]studythe
preorder strategy that a seller may use to sell a perishable
productinanuncertainmarketwithheterogeneouscon-
sumers. ey nd that accurate demand information may
improve the availability of the product, which undermines
the seller’s ability to charge a high preorder price. As a result,
advance demand information may hurt the seller’s prot
due to its negative impact on the preorder season. Sainathan
[31] considers pricing and ordering decisions faced by a
retailer selling a perishable product with a two-period shelf
life over an innite horizon. Sinitsyn [32]investigatesthe
outcome of a price competition between two rms, each
producing two complementary products. It is found that each
rm predominantly promotes its complementary products
together, which is correlationally supported by data in the
shampoo and conditioner and in the cake mix and cake
frosting categories. Liu et al. [33] examine the ecacy of cost
sharing in a model of two competing manufacturer-retailer
supply chains who sell partially substitutable products that
may dier in market size. Some counterintuitive ndings sug-
gest that the rms performing the advertising would rather
bear the costs entirely if this protects their unit prot margin.
Gao et al. [34] show that the weather-conditional rebate
program can increase sales by price discriminating among
a customer’s postpurchase states. Taking advantage of the
early sales, it can also reduce the inventory holding cost and
ordering cost and hence can increase the retailer’s expected
prots.
In addition, channel management is also an important
interface between marketing and supply chain. Chen et al.
[25,26]studyamanufacturer’sproblemofmanaginghis
direct online sales channel together with an independently
owned bricks-and-mortar retail channel, when the channels
compete in service. ey identify optimal dual channel strate-
gies that depend on the channel environment described by
factors such as the cost of managing a direct channel, retailer
inconvenience, and some product characteristics. Brynjolf-
sson et al. [35] investigate local market structures for tradi-
tional retailers and then match these data to a dataset on con-
sumer demand via two direct channels: Internet and catalog.
eir analyses show that Internet retailers face signicant
competition from brick-and-mortar retailers when selling
4 Discrete Dynamics in Nature and Society
mainstream products but are virtually immune from com-
petition when selling niche products. Guo [36] investigates
optimal disclosure strategies/formats in a channel setting
with bilateral monopolies and shows that retail disclosure
leads to more equilibrium information revelation. Chiang
[37] extends the single-period vertical price interaction in a
manufacturer-retailer dyad to a multiperiod setting, in which
a manufacturer distributes a durable product through an
exclusive retailer to an exhaustible population of consumers
with heterogeneous reservation prices. e open-loop, feed-
back, and myopic equilibria for this dynamic pricing game
are explored and compared to the centralized solution.
3.3. Green Logistics and Supply Chain. Green logistics refers
to a logistics form which plans and implements green
transport, green storage, green packaging, green circulation
processing, green recovery, and other activities via advanced
logistics technology. It aims to reduce environmental pollu-
tion and resource consumption arising from logistics activ-
itysoastorealizea“win-win”consequenceinlogistics
development and eco-environmental conservation. As an
important avenue for realizing the sustainable development
strategy, greater attention has been given to green logistics
which will play an important role in industrial upgrading,
transformation of economic structure, promotion of logistics
development level, and other relevant aspects. Green supply
chain is the supply chain management with similar objectives
and core implications. Green logistics as well as supply
chain management is also usually referred to “sustainable”
management.
A typical eld in green logistics and supply chain man-
agement is reverse logistics, sometimes called closed-loop
supply chains, in which there are reverse ows of used prod-
ucts (postconsumer) back to manufacturers. ere has been
substantial research into production planning and inventory
management in remanufacturing systems. Simpson [38]rst
studies a periodic review inventory system with stochastic
and mutually dependent demands and returns and provides
the optimality of a three-parameter inventory policy. Kelle
and Silver [39] consider a dierent model with independent
demand and return processes, where all returned products
should be remanufactured. Inderfurth [40] shows that the
optimal policy derived by Simpson [38] is still optimal in
thecaseofxedcostwhenleadtimesforremanufacturing
and manufacturing are identical. Van der Laan et al. [41]
analyze a push control strategy and a pull control strategy
in a hybrid system and compare them with the traditional
systems without remanufacturing. Teunter et al. [42] explore
the superior inventory strategies for hybrid manufactur-
ing/remanufacturing systems with a long lead time for man-
ufacturing and a short lead time for remanufacturing. Wang
et al. [43] analyze the impacts of the amount of products
manufactured and the proportion of the remanufactured part
to the returned products on the total cost of the hybrid
system, showing that the cost could be reduced signicantly
if these two critical values are optimally set. Other related
works include Kiesm¨
uller [44], Tang and Grubbstr¨
om [45],
Aras et al. [46]. For a comprehensive review, I refer the reader
to Fleischmann et al. [47], Dekker et al. [48], and Ilgin and
Gupta [49].
A typical feature in reverse logistics and closed-loop sup-
plychainsisthequalityuncertaintyofacquiredusedproduct,
which is usually expressed by a random remanufacturing
yield and has been studied in some recent papers. Inderfurth
[50] shows that the uncertainty in returns and demand can
be an obstacle to an environmental-benign recovery strategy
within a reverse logistics system. Inderfurth and Langella
[51] develop heuristics for the problem of obtaining parts
for remanufacturing by disassembling used products or
procuring new ones, under the consideration of random
disassembly yields. Galbreth and Blackburn [52] explore
acquisition and sorting/remanufacturing policies in the case
of a continuum of quality levels for cores with xed quality
distribution. e main premise is that remanufacturing costs
will go down if only the returned products with better
quality are remanufactured. Ketzenberg et al. [53] explore
the value of information in the context of a rm that faces
uncertainty with respect to demand, product return, and
product remanufacturing yield by rst analyzing a simple
single-period model and then proving that the results carry
over multiperiod setting. C¸ orbacioˇ
glu and van der Laan [54]
analyze a two-product system with end-product stock con-
taining both manufactured and remanufactured products
while the remanufacturable stock may contain products of
dierent quality. Zikopoulos and Tagaras [55] investigate the
production problem in a reverse supply chain consisting of
two collection sites and a refurbishing site and examine how
the protability of reuse activities is aected by uncertainty
regarding the quality of returned products. Denizel et al. [56]
propose a stochastic programming formulation to solve the
remanufacturing production planning problem when inputs
of the remanufacturing system have dierent and uncertain
quality levels and capacity constraints.
Although the research on remanufacturing systems is
vast, there are only a few papers that consider a market-driven
acquisition channel for used products. Guide and Jayaraman
[57] and Guide and van Wassenhove [58]arethersttoinves-
tigate this eld, pointing out the importance of used product
acquisition management to deal with the uncertainty in
timing,quantity,andqualityofthereturnedproducts.Guide
et al. [59] develop a quantitative model to determine the
optimal acquisition prices of used products and the selling
price of remanufactured products, assuming that the quantity
of return items can be fullycontrolled by the acquisition price.
Bakal and Akcali [60] extend the model of Guide et al. [59]
into the case of random remanufacturing yield and analyze
the impact of yield on the remanufacturing protability.
Karakayali et al. [61] study the problem of determining the
optimal acquisition price of the end-of-life products and the
selling price of the remanufactured parts under centralized
as well as decentralized remanufacturer-driven and collector-
driven decentralized channels.
3.4. Behavior Operations. e decisions under the con-
sumers’ behavior are important for the rms to gain com-
petitive edge and obtain more prot. e customer’s behav-
ior can be loss averse, risk averse, regretful, and strategic,
Discrete Dynamics in Nature and Society 5
and the papers incorporating such factors are regarded as
increasingly important. K¨
ok and Xu [62]studyassortment
planning and pricing for a product category with heteroge-
neous product types from two brands by modeling consumer
choice using the nested multinomial logit framework with
two dierent hierarchical structures: a brand-primary model
in which consumers choose a brand rst and then a product
type in the chosen brand and a type-primary model in which
consumers choose a product type rst and then a brand
within that product type. Nasiry and Popescu [63]study
the dynamic pricing implications of a new, behaviorally
motivated reference price mechanism based on the peak-end
memory mode, which suggests that consumers anchor on a
reference price that is a weighted average of the lowest and
most recent prices. ey nd that a range of constant pricing
policies is optimal for the corresponding dynamic pricing
problem. Nasiry and Popescu [64] further characterize the
eect of anticipated regret on consumer decisions and on rm
prots and policies in an advance selling context where buyers
have uncertain valuations. Tereyaˇ
goˇ
glu and Veeraraghavan
[65] propose a model that addresses pricing and production
decisions for a rm, using the rational expectations frame-
work.eyshowthatrmsmayoerhighavailabilityof
goods despite the presence of conspicuous consumption and
scarcity strategies are harder to adopt as demand variability
increases. Parlakt¨
urk [66] considers a rm that sells two
vertically (quality) dierentiated products to strategically
forward-looking consumers over two periods, setting the
prices dynamically in each period. It is found that the loss
duetostrategiccustomerbehaviorcanbelesswithtwo
product variants compared to the single-product benchmark,
which indicates that product variety can serve as a lever when
dealing with strategic customers. Cachon and Swinney [67]
consider a retailer that sells a product with uncertain demand
over a nite selling season, with three types of consumers:
myopic, bargain-hunting, and strategic consumers. ey nd
that the retailer stocks less, takes smaller price discounts,
and earns lower prot if strategic consumers are present than
if there are no strategic consumers, and a retailer should
generally avoid committing to a price path over the season.
Another stream of research focuses on the risk attitude
of the rms in the supply chain. Lau’s [68]mightbethe
rst piece of work that studies the newsvendor boy problem
under mean-variance framework, which takes the variance
ofsystemprotorcostintotheutilityfunction.Otherrecent
works employing similar methodology to investigate supply
chainproblemincludeH.S.LauandA.H.L.Lau[69]on
supply chain model with return policy, Buzacott et al. [70]on
the commitment-option contracts, Choi et al. [71]onchannel
coordination, and Wei and Choi [72] on wholesale pricing
and prot sharing scheme.
4. Insights and Future Directions
Fromtheaboveanalysis,wecanabsorbthefollowinginsights
and future directions in the area of operations research of
logistics and supply chain management.
First, the logistics issue regarding the people’s livelihood
becomes a hot spot. e traditional research in this regard is
relatedtoperishableproduct,fashionproduct,andelectronic
product, which have short life cycle. Nowadays, such topics
might include city logistics, emergency logistics, and agricul-
ture supply chain.
Second, new directions on logistics and supply chain
management can be brought about by the development of
economy and technology. A typical example is the informa-
tion technology which leads to the research on e-business and
related distribution channel choice. Nowadays, the common
usageofRFID,cloudtechnique,andbigdatacanbeimpor-
tant research directions for future study.
ird, the environmental related research will continue
to be big issue. With the steady increase in global population
and economic scale, resource crisis, ecological damage, envi-
ronmental pollution, and other issues have drawn universal
concern. It has been the consensus of the international
communitytoattainsocioeconomicsustainabledevelopment
through a greener economic pattern and lifestyle. Many
countries create a new outlook in industrial and technical
competition by increasing investment in the green logis-
tics and supply chain eld, formulating and implementing
variousbills,plans,andstrategies,andstrengtheningthe
implementation of green economic development strategy. In
the future, the range of this topic will not only be just reman-
ufacturing, reverse logistics, and closed-loop supply chain.
Low-carbon issues can be an important research direction.
Finally, multimethodology is an important direction for
future study. Traditionally, major research methodologies in
operations management can be classied into several cate-
gories, such as theoretical modeling, computation and sim-
ulations, surveys, cases, event studies, and behavioral exper-
iments. In recent years, there is an emerging trend towards
combining multiple research methodologies to explore
research problems in logistics and supply chain management.
For example, in addressing the issues of supply chain coor-
dination, some papers establish the respective models and
verify the ndings by real-world cases and some papers con-
duct behavioral experiments with the goal of exploring the
real-world relevance of some theoretical models. Moreover,
the number of the papers with new applications of the
existing methodology, such as cooperative game and behavior
operations, is expected to grow continuously.
Conflict of Interests
e author declares that there is no conict of interests
regarding the publication of this paper.
Acknowledgment
e author gratefully acknowledges the support by the
Fundamental Research Funds for the Central Universities,
no. NKZXB1228.
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