Data Analytics and Optimization in Supply Chain and Logistics Metin Türkay Department of Industrial Engineering Koç-IBM Tedarik Zinciri Araştırma Merkezi Koç University ICT LEIT in H2020 Info Day December 6, 2013, İstanbul

Sustainability Energy Efficiency Optimality Logic-Based Hybrid Multi-Scale RESEARCH PHILOSOPHY CONCEPTS MODELS ALGORITHMS REAL-LIFE APPLICATIONS Robust Efficient Scalable Synthesis Design Analysis Optimization: MINLP, MILP, MIDO Data Driven: Numerical or categorical Math Programming Disjunctive Progr. Multi-Criteria Opt. Energy Sustainable Fossil Fuels Smart Electricity Grid Renewable Energy SCM&Logistics Strategic, Tactical, Operational Sustainable SCM Sustainable Logistics Systems Biology Multi-Group Data Classification Structure-Based Drug Design Dynamics of Genetic Networks "Knowing is not enough; we must apply. Willing is not enough; we must do." -Goethe

WHAT IS A SUPPLY CHAIN?

TWO FACTORS BALANCING ACT EFFICIENCY RESPONSIVENESS

CONCERNS Complexity: supply chains include many activities involving many entities at different time-resolutions Design-Plan-Execute: Divide decisions into 3 levels Strategy-Planning-Operation: Divide decisions into 3 levels Multi-Scale: span over a vast geography, sectors, players Multi-Echelon Decomposition: Divide into levels Multi-Faceted: collaboration/competition at threats from different sources 2-Stage: Consider interaction between 2 adjacent players in the supply chain Uncertainty: many sources of uncertainty Scenario Analysis: Sample a number of possible outcomes and calculate the expectation Disruptions: everything can go wrong Preparation: overdesign, buffers, safety stock WHAT IS THE STATE-OF-THE-ART Everything is based on Divide and Conquer strategies Fixed Recipes through policy analysis Little or no work on Rational/Extensible/Coherent approaches PAST-PRESENT

REAL TIME Uncertainty realization Deviation management Real time optimization Configurability and flexibility SYNCHRONOUS Do not divide, define new paradigms and mechanisms DATA INTEGRATED (DRIVEN) Data Information Knowledge no longer the Holy Grail for Supply Chains HOPE IoT: data from everywhere, everything, all the time Big Data: data analytics 3D Printing & Additive Manufacturing: postponement, eliminate demand uncertainty CYBER PHYSICAL SYSTEM FUTURE

BIG DATA Demand Prices Decisions/Reliability

DEMAND ESTIMATION Periods12345 Error

PRICE ESTIMATION Futures and Options Leading Macroeconomic Indicators Jump Detection Estimate Horizon: accuracy is sensitive to longer horizons Successfully applied to Steel and Electricity prices

DATA CLASSIFICATION Dagliyan, O., F. Uney-Yuksektepe, I.H. Kavakli and M. Turkay, Optimization Based Tumor Classification from Microarray Gene Expression Data, PLoS ONE, 6(2), e14579 (2011). Dagliyan, O., Kavakli, I.H., Turkay, M., Classification of Cytochrome P450 Inhibitors with Respect to Binding Free Energy and pIC(50) Using Common Molecular Descriptors, J. of Chem. Inf & Mod., 49(10), (2009). Armutlu,P., M.E. Ozdemir, S. Ozdas, I.H. Kavakli and M. Turkay, "Discovery of Novel CYP17 Inhibitors for the Treatment of Prostate Cancer with Structure-Based Drug Design", Letters in Drug Design and Discovery, 6(5), (2009). Armutlu, P., M.E. Ozdemir, F. Uney-Yuksektepe, I.H. Kavakli and M. Turkay, Classification of drug molecules considering their IC50 values using mixed-integer linear programming based hyper-boxes method, BMC Bioinformatics, 9, 411 (2008). Uney Yuksektepe, F., O. Yilmaz and M. Turkay, "Prediction of Secondary Structures of Proteins using a Two-Stage Method", Comput. Chem. Eng., 32(1-2), (2008). Kahraman, P. and M. Turkay, "Classification of 1,4-Dihydropyridine Calcium Channel Antagonists using Hyper-Box Approach", Ind. Eng. Chem. Res., 46(14), (2007). Uney, F. and M. Turkay, "A Mixed-Integer Programming Approach to Multi-Class Data Classification Problem", European Journal of Operational Research, 173(3), (2006)

Concepts, Models & Algorithms IBM: the first IBM SUR Award in Turkey-2007, IBM Faculty Award-2009, IBM OCR Award with Haifa Lab, 2012 TÜBİTAK – 5 projects NSF – 2 projects (joint with Carnegie Mellon, UofAkron) European Commission-FP7 – 2 projects (50% for concepts, models & algorithms) European Science Foundation – 1 project TÜPRAŞ – 1 project (50% for concepts, models & algorithms) Energy and Supply Chains TÜBİTAK – 2 projects KoçSistem – 1 project Mitsubishi Corporation – 1 project TÜPRAŞ – 1 project (50% for energy supply chains) İstanbul Ulaşım – 1 project Transportation Systems TÜBİTAK – 2 projects Turkish Automotive Manufacturers Association – 1 project European Commission – 3 projects + 1 approved (starting in 2014) KoçSistem – 1 project İstanbul Ulaşım – 1 project Mitsubishi Corporation – 1 project PROJECT PORTFOLIO

OUR SPONSORS

EC PROJECTS LOG4GREEN: Green Logistics IntRaRegio: Intermodal Logistics OSIRIS: Holistic Approach to Energy Efficiency in Urban Rail [MapDriver]MapDriver: ICT Innovation Uptake by SMEs finalizing the Consortium Agreement, will start in 2014

SUMMARY AT THE INTERFACE ICT Transport Energy Smart Cities and Communities EXPERTISE Solutions methodology to complex problems Big Data and analytics tools Modeling complex systems Optimization-based solution algorithms EXPERIENCE Concepts & Models Solution Algorithms A number of real-life projects