Machine learning and optimization-based modeling for asset management: a case study
International Journal of Productivity and Performance Management
ISSN: 1741-0401
Article publication date: 23 December 2020
Issue publication date: 8 April 2022
Abstract
Purpose
This research is inspired by a real case study from a pump rental business company across the US. The company was looking to increase the utilization of its rental assets while, at the same time, keeping the cost of fleet mobilization as efficient as possible. However, decisions for asset movement between branches were largely arranged between individual branch managers on an as-needed basis.
Design/methodology/approach
The authors propose an improvement for the company's asset management practice by modeling an integrated decision tool which involves evaluation of several machine learning algorithms for demand prediction and mathematical optimization for a centrally-planned asset allocation.
Findings
The authors found that a feed-forward neural network (FNN) model with single hidden layer is the best performing predictor for the company's intermittent product demand and the optimization model is proven to prescribe the most efficient asset allocation given the demand prediction from FNN model.
Practical implications
The implementation of this new tool will close the gap between the company's current and desired future level of operational performance and consequently increase its competitiveness
Originality/value
The results show a superior prediction performance by a feed-forward neural network model and an efficient allocation decision prescribed by the optimization model.
Keywords
Acknowledgements
Erratum: It has come to the attention of the publisher that the article, Muñoz-Villamizar, A., Rafavy, C.Y. and Casey, J. (2020), “Machine learning and optimization-based modeling for asset management: a case study” published in International Journal of Productivity and Performance Management, Vol. ahead-of-print No. ahead-of-print, omitted the acknowledgements and listed incorrect affiliations for the authors Carlos Yohan Rafavy and Justin Casey. This error was introduced in the editorial process and has now been corrected in the online version. The publisher sincerely apologises for this error and for any inconvenience caused.Authors would like to acknowledge the support received from the company under study, the MIT Supply Chain Management master’s program, AdP and the Special Patrimonial Fund at Universidad de La Sabana.
Citation
Muñoz-Villamizar, A., Rafavy, C.Y. and Casey, J. (2022), "Machine learning and optimization-based modeling for asset management: a case study", International Journal of Productivity and Performance Management, Vol. 71 No. 4, pp. 1149-1163. https://doi.org/10.1108/IJPPM-05-2020-0206
Publisher
:Emerald Publishing Limited
Copyright © 2020, Emerald Publishing Limited