Monday, July 29, 2013

Comet Cupboard (Case for Inventory Management for Non-Profits)

Comet Cupboard

The Comet Cupboard is a free to use UT Dallas food pantry initiative dedicated to helping students in need. Its primary mission is to provide necessary food and personal care items to members of the school community. 

Since the facility is located  [locationnext door to my office in library, I always wondered how they managed their inventory being a not profit organization, and run by undergraduate students. Classical inventory management assumes cost minimizing or profit maximizing participants and very less research has been dedicated to not for profit management. 

Key Features:

  1. Not for profit - objective is to maximize social surplus,
  2. Accepts donations of non-perishable, unexpired food items only (durable goods) such as canned soups, ramen, dried fruits etc. - unused inventory is carried over,
  3. Accepts monetary donations, therefore has a budget to buy items not received via donations,
  4. Maintains a list of "high demand" items [click here].

A Naïve Problem Formulation:


Problem Formulation
This is a very simple formulation, where we assume there are N items managed by comet cupboard, and demand for each items is known in advance given by di's. They know exact inventories at hand x0's , the money received B as donation, and the prices pi. With this the decision is to order i.e. xi's. 

The key is the objective function as this focuses on demand satisfying and procuring as much so that budget constraint is usually tight (assuming high levels of demand). In such a situation, demand forecasting is very crucial and they did a good job by identifying high demand items (they can do better though by high medium low demands). Moreover, because of large assortment size, the problem becomes more complicated.

Recommendations:

  1. Track inventories, to estimate demands,
  2. Surveys to see what students 'prefer' in terms of products,
  3. This model does not assume substitutability among products, a better model will include this and it is a good idea to save money by providing cheaper substitutes,
  4. We can make this model richer by adding constraint on individuals (which is right now implemented): each student is allowed to  take up to 4 items. 
Feel free to share comments and thoughts on this.

Thursday, July 25, 2013

Probability: Explaining Events


I wrote this explanation for a student in Stats class. Might be useful for students at undergraduate level probability/statistics classes.

(a) Mutually Exclusive Events: Two events or instances are mutually exclusive if they can not occur together. Eg; If you toss a coin Head and Tails are mutually exclusive events. If you roll a die getting a 1 or a 2 are mutually exclusive since you can not get both of them in a single roll. So, in terms of math: probability (Heads or Tails) = prob(Head) + prob(Tails) = 1/2 + 1/2 = 1. Note that there is no prob (Head and Tails) term as prob(Head and Tails) = 0, as they are mutually exclusive. Similarly, prob(1 or 2) = prob(1) + prob (2) = 1/6 + 1/ 6 = 1/3

(b) Collectively Exhaustive Events: are the only possible events! Eg; When you roll a die once collectively exhaustive will be 1,2,3,4,5,6 events. if you toss a coin Heads and Tails are the collectively exhaustive events. so, in terms of math sum of probabilities of collectively exhaustive events is always 1. i.e. prob (head or tails) = 1. prob(1,2,3,4,5,6) = 1.

Hostess is back-for good?

Hostess
[Picture taken on my recent visit to Tom Thumb.]
Hostess Brands, inc. is back to our favorite grocery stores. Popular before popularized by the movie Zombieland (2009), the company declared bankruptcy in 2012 and is now under a new management.


Some highlights of the comeback include 
  1. an additional shelf life of 45-day instead of previous 26-day,
  2. same price and 
  3. even more products.

People say the Hostess returned into business because there was a fan club, i.e. an existing loyal customer base who loved twinkies and would definitely buy! Interesting thing is the impact of increased shelf life keeping the price same. The product is right now marketed as 'the sweetest comeback in the history of ever'. We will see how the new company fares in times to come and how the fan-base reacts to this sweetest comeback. Early reports suggest that there is already a shortage due to high demands! What is the reason? New customers? Increased shelf-life? Or less production?

What I follow?

To know what is latest in operations management (OM) and people who care about operations, I follow writings of experts in OM and business/economics/political news from various sources.

List of OM/OR Expert Blogs

  • Global Supply Chain Musings (Krannert): Prof. Ananth Iyer's blog from Krannert School of Management, Purdue. Prof. Iyer is Susan Bulkeley Butler Chair in Operations Management and Associate Dean of Graduate Studies at Krannert. This blog is all about latest global supply chain events, their impacts and questions raised. 
  • Jay and Barry's OM Blog (OM Education Blog): This is a blog run by Prof. Render and Prof. Heizer, authors of Operations Management. This site is a mix of education related blogs on OM, guest articles on supply chain and OM in news.
  • Michael Trick's Operations Research Page (Tepper):  Professor Michael Trick's blog is full of tricks from OR, including technical and research topics, latest news, puzzles and a live discussion/forum about OR. 
  • The Operations Room (Kellogg):  "The Operations Room is a forum for discussing current topics in operations management (OM).  We have no particular agenda but are looking to identify interesting strategic and tactical developments in the field.  Along the way, we aim to create a catalog of articles on OM topics that is useful to both the Kellogg community and a wider set of readers. We take a broad view of operations.  Despite the propaganda poster factory above, we do not interpret operations as simply manufacturing.  Rather we think of operations as the on going work of the organization.  As such it has relevance for any industry, any market, any firm, any nonprofit organization, or any governmental agency.  We thus intend to cover a wide variety of settings and topics." - what they say about the blog. This is a well-written blog with videos, pictures and explanation about hot issues in operations. A good place to look for smart research areas and understand the latest developments.
  • Punk Rock Operations Research (Wisconsin Madison): Prof. Laura Mclay's blog is all about punk in operations. Prof. Mclay's blogs about interesting topics in OR, her in-class teaching experiences, how operations can be better taught in classrooms, and ways operations can be fun in action. She also blogs about commentaries from her professional career experiences as a PhD student and as a Professor now.