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  1. International Journal of Management (IJM) Volume 11, Issue 5, May 2020, pp. 54-64, Article ID: IJM_11_05_006 Available online at http://www.iaeme.com/ijm/issues.asp?JType=IJM&VType=11&IType=5 Journal Impact Factor (2020): 10.1471 (Calculated by GISI) www.jifactor.com ISSN Print: 0976-6502 and ISSN Online: 0976-6510 DOI: 10.34218/IJM.11.5.2020.006 © IAEME Publication Scopus Indexed OPTIMIZATION MODEL OF THE ENTERPRISE LOGISTICS SYSTEM USING INFORMATION TECHNOLOGIES Mariya Naumenko Department of Management and Military Economy, National Academy of the National Guard of Ukraine, Kharkiv, Ukraine Nataliia Valiavska Department of Business Logistics and Transportation Technology, State University of Infrastructure and Technologies, Kyiv, Ukraine Mariia Saiensus Department of Marketing, Odessa National Economics University, Odessa, Ukraine Olena Ptashchenko Department of International Business and Economic Analysis, Simon Kuznets Kharkiv National University of Economics, Kharkiv, Ukraine Vitalii Nikitiuk Department of Economics, Kremenchuk Mykhailo Ostrohradskiy National University, Kremenchuk, Ukraine Anton Saliuk Department of Marketing and Corporate Communications Department, Simon Kuznets Kharkiv National University of Economics, Kharkiv, Ukraine ABSTRACT The proposed model for optimizing the logistics system of an enterprise using information technology. The motivation to build the model emphasizes the critical role that new information technologies play in significantly increasing the availability of data of a wide variety of types related to the transportation process and servicing logistics tasks. In particular, the ability to operate in real-time with a significant amount of detailed data collected locally can potentially improve the accuracy of information about critical unobserved characteristics of the production process. Among such unobservable values, one can indicate various kinds of attributes of the efforts made by the organization and individual employees to achieve different goals and objectives of providing logistics services. http://www.iaeme.com/IJM/index.asp 54 editor@iaeme.com
  2. Optimization Model of the Enterprise Logistics System Using Information Technologies Keywords: Enterprise, Information Technologies, Logistics System Optimization Model Cite this Article: Mariya Naumenko, Nataliia Valiavska, Mariia Saiensus, Olena Ptashchenko, Vitalii Nikitiuk, Anton Saliuk, Optimization Model of the Enterprise Logistics System Using Information Technologies, International Journal of Management, 11 (5), 2020, pp. 54-64. http://www.iaeme.com/IJM/issues.asp?JType=IJM&VType=11&IType=5 1. INTRODUCTION Information technology in logistics has two useful functions. Firstly, with their help, the process of receiving orders, processing goods, selecting, sending and invoicing is accelerated. The faster all this happens, the shorter the order cycle from the point of view of the buyer, less paperwork and errors, and hence cost. If the company can quickly respond to customer requests, it reduces the uncertainty for itself regarding fluctuations in demand and the timing of orders. It thus eliminates the need for extra insurance stocks. Secondly, information technology has a good effect on the planning and evaluation of alternatives. To do this, you can use decision support tools that can increase the speed, accuracy and completeness of logistic decisions. The level of determining the location of each unit of production at the moment predetermined the need for processing huge volumes of data. Modern information technology allows you to implement such processing. In particular, information technology provides an opportunity to compare the quality of services of various suppliers, assess the effectiveness of product distribution [1-5]. The use of information technology in the logistics systems of Ukrainian enterprises is continually growing (Fig. 1) 250 180.0% 159.1% 160.0% 204.5 200 140.0% 123.6% 131.6% 125.6% 111.2% 116.7% 155.4 120.0% 114.9% 111.5% 112.4% 111.6% 111.4% 150 139.5 101.3% 100.0% 94.6% 90.6% 112.9 101.5 80.0% 100 69.5 60.0% 62.3 63 63.8 49.6 40.0% 50 37.8 42.5 31.2 29.5 32.9 20.0% 0 0.0% 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 million UAH Growth rate, % Figure 1 The use of information technology in the logistics systems http://www.iaeme.com/IJM/index.asp 55 editor@iaeme.com
  3. Mariya Naumenko, Nataliia Valiavska, Mariia Saiensus, Olena Ptashchenko, Vitalii Nikitiuk, Anton Saliuk Finally, it comes to the understanding that processing information flows is no less necessary than real ones. It should be noted that the evolution of the world market gives advantages to a country that creates high-tech products, including new technologies and modern professional knowledge, for producing and transferring for production to other countries. 2. ENTERPRISE LOGISTICS SYSTEM Logistics is the science and art of planning, organizing, creating the conditions for motivation and controlling the progress of the material flow. One of the options for the logistics system, demonstrating its concept or principles, is shown in Fig. 2. Materials Management Distribution Management (Supply) (Sales) Stocks Intermediate link Finished Raw materials, products spare parts, (enterprise semi-finished Unfinished warehouse) products, Consumer production or packaging end user Finished products Intermediate link Production Logistics Figure 2 Logistics Information System Functions The principle of the logistics system, or its concept, is associated with the management of materials (with supply) and with the management of distribution (with sales). American scientists believe that logistics provides a mechanism for developing tasks and strategies within which daily material flow management activities can be carried out. One of the features of the logistics principle is that not only special attention is paid to the integration of activities, but also their integration is carried out. For example, in many companies, responsibility for inventories and responsibility for transportation can be considered production and distribution functions, respectively, and decisions on the former are often made without regard to the latter. In the logistics system, both of them must be interconnected, and the negative and positive aspects of the various functional areas of the logistics system must be taken into account. When creating a logistics system, as a rule, these functional areas of logistics are used. Therefore, the main costs of logistics are the sum of the costs of transporting the product, its storage, maintaining inventory, receiving, shipping and packaging of goods; order processing costs; administrative expenses, etc. http://www.iaeme.com/IJM/index.asp 56 editor@iaeme.com
  4. Optimization Model of the Enterprise Logistics System Using Information Technologies Data on shares of the total logistics costs of each of its functional areas is presented in Fig. 3. 18 Transport 10 46 Warehousing Stocks Other 26 Figure 3 The share of the total cost of logistics of each of its functional areas The logistics system is not only a source of costs but also a potential tool for creating demand for products. By improving the logistics system, you can offer the best service or lower prices, thereby attracting additional customers. The company loses customers when it does not ensure the delivery of goods on time. Hence, customers claim that the possibility of organizing a quick supply is valued by them more than the popularity of the trademark of the supplier company. 3. INFORMATION TECHNOLOGY IN LOGISTICS For the implementation of precise control in the material through the stream, specific procedures must be performed, as well as the availability of appropriate means and methods of information processing. Automated information systems at the macroeconomic agent level are divided into the following groups: 1) planned; 2) dispatching; 3) operational. Planned information systems are intended for management at the administrative level; their competence includes the adoption of long-term strategic decisions; planning is carried out in the chain of material flow "sales-production-supply". This group is in charge of such tasks as: 1) optimization and creation of new and existing links in the material flow; 2) management of conditionally constant data that changes little during organizational work; 3) planning of production stages; 4) the general supervision of the resources and reserves of the organization; 5) reserve management; 6) demand and resource planning. Dispatching information systems are intended for management at the warehouse and workshop levels; they are stabilizers of the operation of logical information systems. They can work in various ways: in batch mode or through interactive processing. The competence of dispatching information systems includes: 1) disposal of intra-organization transport (in-plant or in-warehouse); 2) inventory management of manufactured products (places of storage, warehousing); http://www.iaeme.com/IJM/index.asp 57 editor@iaeme.com
  5. Mariya Naumenko, Nataliia Valiavska, Mariia Saiensus, Olena Ptashchenko, Vitalii Nikitiuk, Anton Saliuk 3) contract supplies and provision of materials and resources; 4) the formation of goods on orders, their picking and accounting. Operational information systems are intended for management at the administrative and operational level. This system is characterized by a high speed of processing relevant information, which arrives at high speed to the computer, which makes it work on-line. This system implements the following features: 1) information on the movement of goods at the current time; 2) the issuance of administrative and control actions on the control object; 3) warehouse management and inventory accounting; 4) preparation for sending products; 5) operational production management; 6) management of automated equipment. The following hierarchy of information systems can be distinguished in the logistics management of an enterprise. The functions of the logistic information system (Fig. 4) [6-10]. Planning function • forecasting; • inventory management. Databases: Communication Coordination • external data; function of function • internal data. customer service Control function • key indicators. Figure 4 Logistics Information System Functions Databases: • external data: customer requests and consignments coming from abroad; • internal data: production and stocks. Planning function: • inventory management: taking into account the goods/buyer, taking into account the location; • demand forecasting; • strategic planning. Coordination function: • scheduling production; • material requirements planning; • sales/marketing planning. http://www.iaeme.com/IJM/index.asp 58 editor@iaeme.com
  6. Optimization Model of the Enterprise Logistics System Using Information Technologies Communication function of customer service: • status of the customer’s order; • availability of stocks: taking into account the assortment of goods + taking into account the location of goods; • the condition of goods arriving from abroad. Control function: • customer service level; • the effectiveness of the seller; • carrier performance; • the effectiveness of the system as a whole. 4. METHODOLOGY FOR THE IMPLEMENTATION OF INFORMATION TECHNOLOGY TO OPTIMIZE THE LOGISTICS SYSTEM OF THE ENTERPRISE The introduction of information technology creates additional opportunities for optimizing the logistics system of the enterprise. The fast transfer of large amounts of data and the rather complicated processing of this data in tight time intervals contribute to the introduction of more complex methods of organizing transport management, which allows increasing the economic efficiency of the enterprise, which ultimately affects the growth of its profitability. In particular, the introduction of information technology makes it easier to collect data and improves the quality of information collected about production and logistics processes. Correctly interpreted information of this kind (processed by appropriate algorithms) allows earlier to identify problems in the process of organizing logistics, to find bottlenecks and, thereby, contribute to the earlier adoption of measures to eliminate them. Ensuring the proper set and level of efforts and measures for the implementation of technological operations can be controlled with greater accuracy using modern information technologies. Consider the enterprise logistics process from the point of view close to the classical economic production function (1): 𝑦 = 𝑓(𝑒) + 𝜀 (1) where y is the level of transportation services (expressed in appropriate units, for example, ton-kilometers), e is the level of efforts to carry out the corresponding technological operations, f is the production function responsible for the cause-effect relationship between the efforts expended and the size of the services performed, and, finally, ε is a random component describing the influence on the logistic process of factors whose accounting is either impossible or too costly for the optimal organization of the transport process. A possible general form of the functional dependence of the level of services on the level of expended efforts is presented in Fig. 5. http://www.iaeme.com/IJM/index.asp 59 editor@iaeme.com
  7. Mariya Naumenko, Nataliia Valiavska, Mariia Saiensus, Olena Ptashchenko, Vitalii Nikitiuk, Anton Saliuk y f(e) A0e + B0 e Figure 5 The functional form of the dependence of the level of logistics services on the effort Among the usual characteristics of such a dependence, one should mention an increase in the function f (the level of logistics services grows with an increase in efforts to provide them). At the same time, the growth may slow down with an increase in efforts (the function f is concave in a non-strict sense). Presumably, the influence of random factors, regardless of the effort expended, is distributed around zero, more precisely, 0 is the median of the distribution (2): 𝑃(𝜀 < 0) = 𝑃(𝜀 > 0) (2) The situation should be considered natural when, at the level of management of the logistic process, it is not possible to observe the level of efforts e directly, but only the final level of services y. In this case, it is possible to implicitly calculate the "expected" level of effort, based on the observed level of services provided (3): 𝑒 ∗ = 𝑀(𝑓 −1 (𝑦 − 𝜀)|𝑦) (3) where M is the median of the conditional distribution. Moreover, not knowing the specific form of the distribution of the random factor 𝜀, the organizer of the logistic process can only evaluate the right side of the above formula. For example, in the case of a number n of independent results of the logistic process with presumably the same level of effort, an empirical median can be used (4): 1 𝑒̂ ∗ = ̂ + 𝑚𝑖𝑛𝑀 (𝑠𝑢𝑝𝑀 ̂) (4) 2 where 𝑀 ̂ is the operator of the power of the set. In the case of a more special type of the production function of the logistic process 𝑓(𝑒) = 𝐴0 𝑒 + 𝐵0 (see Fig. 3) and the additional requirement 𝐸(𝜀) = 0, the effort spent can be estimated using the empirical mean (5): http://www.iaeme.com/IJM/index.asp 60 editor@iaeme.com
  8. Optimization Model of the Enterprise Logistics System Using Information Technologies 1 ∑𝑛𝑖=1 𝑦𝑖 − 𝐵0 ∗ 𝑛 𝑒̂ = ( ) (5) 𝐴0 Note that the variance of the error of this kind of estimate will be 𝜎 2 /𝑛 if the variance of the random factor was 𝜎 2 . Of course, in reality, there are few opportunities to observe the results of independent logistics processes with the same level of effort. In this case, the variance of the error obtained above the estimate will not significantly differ from the variance of the random factor of the logistic process (and in the case of one observation, 𝑛 = 1 will coincide exactly with it). How can the implementation of information technologies help in this case? Presumably, information technology will allow you to receive, save and process other signals that carry relevant information about the effort spent. In other words, the introduction of information technologies in this model can mean the addition of additional observable values (more detailed data on how the logistics process proceeds) of the form (6): 𝑧𝑗 = 𝐵𝑗 + 𝐴𝑗 𝑒 + 𝜀𝑗 , (𝑗 = 1, … , 𝑘) (6) where random factors 𝜀𝑗 can be considered independently distributed with an average (mathematical expectation) of 0. Adding additional data of this kind, generally speaking, can significantly improve the initial assessment of the effort spent, even having only one "observation" (one realized case of the organization of the transport process). Indeed, in most cases, the following estimate will be better than the initial one (7): 𝑛 1 𝑘 1 ( ∑𝑛𝑖=1 𝑦𝑖 − 𝐵0 ) ( ∑𝑘𝑗=1 𝑧𝑗 − 𝐵𝑗 ) 𝑒̂ ∗ = 𝑛+𝑘 𝑛 + 𝑛+𝑘 𝑛 (7) 𝐴0 𝐴𝑗 In this case, the variance of the error of this estimate will be equal to (8): 𝑘 𝑘 (𝑛𝜎 2 + ∑ 𝜎𝑗2 ) (8) (𝑛 + 𝑘)2 𝑗=1 where 𝜎𝑗2 is the variance of the random factor 𝜀𝑗 . In other words, the new estimate will be better than the old one if the average variance of random data factors available using information technology does not exceed (2𝑛 + 𝑘)𝜎 2 – which is significantly higher than the variance of the original random factor. Also, with an increase in the quantity and quality of data being collected within the framework of implemented information systems (an increase in k and a decrease in the average variance 𝜎𝑗2 ), the accuracy of estimating the expended efforts 𝑒̂ ∗ also increases. In other words, with sufficient accuracy of the data obtained using information technology (and the accuracy restrictions are quite onerous), accounting for these data can significantly optimize the enterprise’s logistics system, allowing it to better control the nature of the enterprise’s internal logistics processes in the presence of numerous random factors. http://www.iaeme.com/IJM/index.asp 61 editor@iaeme.com
  9. Mariya Naumenko, Nataliia Valiavska, Mariia Saiensus, Olena Ptashchenko, Vitalii Nikitiuk, Anton Saliuk 5. RESULTS AND DISCUSSION As an example, we consider the situation with one type of data, the ability to take into account which could arise as a result of the application of information technologies to optimize the logistics system of the enterprise. Suppose that as such a type of data, it became possible to take into account the percentage of goods detained in individual sections of the supply chain for more than a certain period concerning the planned one. This value will be denoted by z1. At the same time, the target variable y, the influence of which efforts on the part of the company's employees needs to be monitored, will take the percentage of goods delivered by this territorial division of the company on time. Of course, the focused efforts of the enterprise's employees to ensure timely delivery of goods and denoted by us as e will affect both the variable of interest y and additional data z1. As a linear approximation in the field of currently achieved levels of efficiency, we can assume that the nature of these types of influence is described in the form of equations (9) – (10): 𝑦 = 𝐵0 + 𝐴0 𝑒 + 𝜀0 (9) 𝑧1 = 𝐵1 + 𝑒 + 𝜀1 (10) Under the "efforts of employees" is understood, for example, the number of working hours spent by employees to ensure the timely delivery of goods, provided that the quality of the work carried out by employees corresponds to a given reference level. At the same time, the choice of the scale is quite arbitrary, so we can normalize it so that in the equation for the connection with the percentage of delays in certain parts of the chain, our magnitude of effort is included with a coefficient of 1. In addition to the scale, we are also free to choose the starting point of reference and to consider under the efforts not the absolute value of the hours spent by the employees, but their deviation from some predetermined standard. The reference can be chosen in such a way that, when choosing a reference level of effort (which in our designations will correspond to e = 0), the expected percentage of product delays in individual sections of the logistics chain will be equal to a predetermined value, which, as is easy to see, will be unambiguous identify the coefficient B1, because for 𝑒 = 0 we get 𝐸𝑧1 = 𝐵1. As the expected percentage of product delays in individual sections of the supply chain, we take the value 𝐵1 = 10. Once we have decided on the normalization of the level of effort, it remains for us to determine the remaining coefficients 𝐵0 and 𝐴0 . To determine them, we substitute the expression for e from equation (9) into equation (10). We get: 𝑦 = 𝐵0 − 𝐴0 𝐵1 + 𝐴0 𝑧1 + 𝜀̃ (11) where 𝜀̃ = 𝜀0 − 𝐴0 𝜀1. Thus, we expressed the observed value of y in terms of the observed (due to information technology) value of 𝑧1 and random error 𝜀̃. In other words, we can find an estimate of the coefficients 𝐵0 and 𝐴0 , using the usual linear regression of y on 𝑧1 , we obtain: 1 ∑𝑛 𝑛 𝑖=1 𝑦𝑖 ∑𝑖=1 𝑧1𝑖 ∑𝑛𝑖=1 𝑦𝑖 𝑧1𝑖 − 𝑛 𝑛 𝐴0 = ∑𝑛 2 (12) 𝑧 ∑𝑛𝑖=1 𝑧1𝑖 2 − 𝑛 𝑖=1 1𝑖 𝑛 𝑛 ∑𝑖=1 𝑦𝑖 ∑𝑖=1 𝑧1𝑖 𝐵̂0 = − 𝐴̂0 + 𝐴̂0 𝐵1 (13) 𝑛 𝑛 http://www.iaeme.com/IJM/index.asp 62 editor@iaeme.com
  10. Optimization Model of the Enterprise Logistics System Using Information Technologies Table 1 shows the possible observed values of y and z1 in 12 cases. Table 1 Observed percentages of goods delivered on time and percent delays in individual sections of the logistics chain S. No Goods delivered on time, % Delays, % 1 8,72 12,98 2 9,12 12,83 3 6,77 4,63 4 4,95 5,51 5 7,17 14,39 6 7,69 8,15 7 14,2 9,22 8 9,1 12,5 9 5,69 7,5 10 0,72 8,04 11 10,4 8,6 12 4,2 6,8 Using these data, by virtue of formulas (12) and (13) we obtain: 𝐴0 = 0,44; 𝐵0 = 9,01 Suppose now that after obtaining the estimates of the coefficients in equations (9) and (10), which describe the dependence of our observed data on the expended unobserved efforts, the manager observes the current (one) implementation - the result of work over the past month in terms of ensuring the delivery of goods on time y and the share of delayed goods in certain sections of the logistics chain z1. Based on these data, the manager can make the following assessments of unobserved staff efforts: 𝑒̂ ∗ = (𝑦 − 9,01)/0,88 + (𝑧1 − 12) / 2 The accuracy of this formula is given by the reciprocal of the variance: 1 1 = 0.5 (𝜎 2 + 𝜎12 ) 4 At the same time, the accuracy of the formula, which does not take into account the information contained in the information collected by the information system, of the percent of goods detained in individual sections of the logistics chain is 1/𝜎 2 = 25 (the estimate itself is given 𝑒̂ ∗ = (𝑦 − 9,01)/0,44), which is 1.85 times less than the above value. 6. CONCLUSION Logistics can rightfully be considered a significant factor in the implementation of measures aimed at improving the economic efficiency of production and marketing. Substantial progress in rationalizing these areas of activity can be achieved by maximizing the coordination of material and information flows when they are combined, which is one of the main tasks of logistics. To solve it, the widespread use of electronic data processing, standardization of material and technical relations, organization of work based on scientific functional analysis and structuring, as well as the use of new technologies leading to automation of operations are required. http://www.iaeme.com/IJM/index.asp 63 editor@iaeme.com
  11. Mariya Naumenko, Nataliia Valiavska, Mariia Saiensus, Olena Ptashchenko, Vitalii Nikitiuk, Anton Saliuk The use of information technology in logistics systems is aimed at ensuring the distribution of goods and interaction between departments of the enterprise, as well as between enterprises in the process of supply and marketing of goods. A further area of research may consider the construction of integrated computerized information systems, which require appropriate technical, software and linguistic support. REFERENCES [1] Kai Wang. The Method Research of Production Enterprise Logistics System Integration, August 2013, DOI: 10.4028/www.scientific.net/AMR.734-737.3320 [2] Jian Hua Yang. A Method of Layout Rearrangement for Enterprise Logistics System, January 2012, DOI: 10.4028/www.scientific.net/AMR.442.446 [3] Dźwigoł, H., Shcherbak, S., Semikina, M., Vinichenko, O., & Vasiuta, V. Formation of Strategic Change Management System at an Enterprise, Academy of Strategic Management Journal, 2019, 18(SI1), P. 1-8. [4] V. Panasyuk, O. Chereshnyuk, S. Sachenko, A. Banasik, I. Golyash. Fuzzy-multiple approach in choosing the optimal term for implementing the innovative project, Proceedings of the 2017 IEEE 9th International Conference on Intelligent Data Acquisition and Advanced Computing Systems: Technology and Applications, IDAACS 2017, Bucharest, Romania, 21-23 September 2017, P. 533-537. [5] O. Shtepa, T. Nikolenko, V. Matsuka, S. Suprunenko, O. Galenko, S.Kropelnytska. Economic-Mathematical Model for Assessing the Sensitivity of International Innovation and Investment Projects, International Journal of Innovative Technology and Exploring Engineering, 2019, Volume-8 Issue-12, P. 140-145. [6] Prause G. Sustainable Development of Logistics Clusters in Green Transport Corridors, Journal of Security and Sustainability Issues, 2014, 4(1), P. 59-68. [7] Prause G., Mendez M., Garcia-Agreda S. Attitudinal loyalty and trust in entrepreneurship: building new relationships, International Entrepreneurship and Management Journal, 2013, 9 (4), P. 531-540. [8] Kwilinski A., Tkachenko V., Kuzior A. Transparent cognitive technologies to ensure sustainable society development, Journal of Security and Sustainability Issues, 2019, 9(2), P. 561-570 [9] Кwilinski A. Implementation of Blockchain Technology in Accounting Sphere, Academy of Accounting and Financial Studies Journal, 2019, 23(SI2), 1528-2635-23-SI-2-412, P. 1-6. [10] A. Haseltalab, Mohammad Ali Badamchizadeh. Optimization of Distributed Control Systems Using Information Technology Assets, January 2012, DOI: 10.7763/IJCTE.2012.V4.465 [11] Neeraj Saini and G. Agarwal, An Optimization Model to Analyze the Railway Capacity, International Journal of Mechanical Engineering and Technology, 8(8), 2017, pp. 1327– 1333. [12] Stanislav Praček, Dynamic Optimization Model for Unwinding Yarn in Textile Production: A Simulation Study, International Journal of Civil Engineering and Technology, 9(11), 2018, pp. 1854–1862. [13] Hanamane M. D, Atar K. D, Mudholkar R. R., Fuzzy Based Co-Generation Power Plant Optimization Model for Sugar Industry, International Journal of Electronics and Communication Engineering & Technology, 4(3), 2013, pp. 139–147. http://www.iaeme.com/IJM/index.asp 64 editor@iaeme.com
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