IDEAS home Printed from https://ideas.repec.org/a/inm/ormnsc/v49y2003i9p1168-1179.html
   My bibliography  Save this article

A New Decision Rule for Lateral Transshipments in Inventory Systems

Author

Listed:
  • Sven Axsäter

    (Department of Industrial Management and Logistics, Lund University, P.O. Box 118, SE--22100, Lund, Sweden)

Abstract

This paper deals with a single--echelon inventory system consisting of a number of parallel local warehouses facing compound Poisson demand. There are standard holding and backorder costs as well as ordering costs at all warehouses. Normally, the warehouses replenish from an outside supplier. However, lateral transshipments between the warehouses are also possible. Such transshipments take no time but incur additional costs. When a demand occurs at a warehouse, the question is whether the whole demand or part of it should be covered by a lateral transshipment from another warehouse. Given a set of alternative decisions, our decision rule minimizes the expected costs under the assumption that no further transshipments will take place. This rule is then used repeatedly as a heuristic. A simulation study illustrates how the suggested technique performs under different conditions.

Suggested Citation

  • Sven Axsäter, 2003. "A New Decision Rule for Lateral Transshipments in Inventory Systems," Management Science, INFORMS, vol. 49(9), pages 1168-1179, September.
    • Handle: RePEc:inm:ormnsc:v:49:y:2003:i:9:p:1168-1179
    DOI: 10.1287/mnsc.49.9.1168.16568
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1287/mnsc.49.9.1168.16568
    Download Restriction: no
    File URL: https://libkey.io/10.1287/mnsc.49.9.1168.16568?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Lawrence W. Robinson, 1990. "Optimal and Approximate Policies in Multiperiod, Multilocation Inventory Models with Transshipments," Operations Research, INFORMS, vol. 38(2), pages 278-295, April.
    2. T. W. Archibald & S. A. E. Sassen & L. C. Thomas, 1997. "An Optimal Policy for a Two Depot Inventory Problem with Stock Transfer," Management Science, INFORMS, vol. 43(2), pages 173-183, February.
    3. Awi Federgruen & Yu-Sheng Zheng, 1992. "An Efficient Algorithm for Computing an Optimal (r, Q) Policy in Continuous Review Stochastic Inventory Systems," Operations Research, INFORMS, vol. 40(4), pages 808-813, August.
    4. Minner, Stefan & Silver, Edward A. & Robb, David J., 2003. "An improved heuristic for deciding on emergency transshipments," European Journal of Operational Research, Elsevier, vol. 148(2), pages 384-400, July.
    5. Hau L. Lee, 1987. "A Multi-Echelon Inventory Model for Repairable Items with Emergency Lateral Transshipments," Management Science, INFORMS, vol. 33(10), pages 1302-1316, October.
    6. Jovan Grahovac & Amiya Chakravarty, 2001. "Sharing and Lateral Transshipment of Inventory in a Supply Chain with Expensive Low-Demand Items," Management Science, INFORMS, vol. 47(4), pages 579-594, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Zou, Li & Dresner, Martin & Windle, Robert, 2010. "A two-location inventory model with transshipments in a competitive environment," International Journal of Production Economics, Elsevier, vol. 125(2), pages 235-250, June.
    2. Ma, Hong & Miao, Zhaowei & Lim, Andrew & Rodrigues, Brian, 2011. "Crossdocking distribution networks with setup cost and time window constraint," Omega, Elsevier, vol. 39(1), pages 64-72, January.
    3. Mahesh Nagarajan & S. Rajagopalan, 2008. "Inventory Models for Substitutable Products: Optimal Policies and Heuristics," Management Science, INFORMS, vol. 54(8), pages 1453-1466, August.
    4. Xinxin Hu & Izak Duenyas & Roman Kapuscinski, 2008. "Optimal Joint Inventory and Transshipment Control Under Uncertain Capacity," Operations Research, INFORMS, vol. 56(4), pages 881-897, August.
    5. Jason Acimovic & Stephen C. Graves, 2015. "Making Better Fulfillment Decisions on the Fly in an Online Retail Environment," Manufacturing & Service Operations Management, INFORMS, vol. 17(1), pages 34-51, February.
    6. Milind Dawande & Srinagesh Gavirneni & Yinping Mu & Suresh Sethi & Chelliah Sriskandarajah, 2010. "On the Interaction Between Demand Substitution and Production Changeovers," Manufacturing & Service Operations Management, INFORMS, vol. 12(4), pages 682-691, September.
    7. Satır, Benhür & Savasaneril, Secil & Serin, Yasemin, 2012. "Pooling through lateral transshipments in service parts systems," European Journal of Operational Research, Elsevier, vol. 220(2), pages 370-377.
    8. Hui Zhao & Vinayak Deshpande & Jennifer K. Ryan, 2006. "Emergency transshipment in decentralized dealer networks: When to send and accept transshipment requests," Naval Research Logistics (NRL), John Wiley & Sons, vol. 53(6), pages 547-567, September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. van Wijk, A.C.C. & Adan, I.J.B.F. & van Houtum, G.J., 2019. "Optimal lateral transshipment policies for a two location inventory problem with multiple demand classes," European Journal of Operational Research, Elsevier, vol. 272(2), pages 481-495.
    2. Paterson, Colin & Kiesmüller, Gudrun & Teunter, Ruud & Glazebrook, Kevin, 2011. "Inventory models with lateral transshipments: A review," European Journal of Operational Research, Elsevier, vol. 210(2), pages 125-136, April.
    3. Meissner, Joern & Senicheva, Olga V., 2018. "Approximate dynamic programming for lateral transshipment problems in multi-location inventory systems," European Journal of Operational Research, Elsevier, vol. 265(1), pages 49-64.
    4. T W Archibald & D P Black & K D Glazebrook, 2010. "The use of simple calibrations of individual locations in making transshipment decisions in a multi-location inventory network," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 61(2), pages 294-305, February.
    5. Jian Yang & Zhaoqiong Qin, 2007. "Capacitated Production Control with Virtual Lateral Transshipments," Operations Research, INFORMS, vol. 55(6), pages 1104-1119, December.
    6. Tiacci, Lorenzo & Saetta, Stefano, 2011. "Reducing the mean supply delay of spare parts using lateral transshipments policies," International Journal of Production Economics, Elsevier, vol. 133(1), pages 182-191, September.
    7. Paterson, Colin & Teunter, Ruud & Glazebrook, Kevin, 2012. "Enhanced lateral transshipments in a multi-location inventory system," European Journal of Operational Research, Elsevier, vol. 221(2), pages 317-327.
    8. Kang, Jae-Hun & Kim, Yeong-Dae, 2012. "Inventory control in a two-level supply chain with risk pooling effect," International Journal of Production Economics, Elsevier, vol. 135(1), pages 116-124.
    9. Zümbül Atan & Lawrence V. Snyder & George R. Wilson, 2018. "Transshipment policies for systems with multiple retailers and two demand classes," OR Spectrum: Quantitative Approaches in Management, Springer;Gesellschaft für Operations Research e.V., vol. 40(1), pages 159-186, January.
    10. Bhatnagar, Rohit & Lin, Bing, 2019. "The joint transshipment and production control policies for multi-location production/inventory systems," European Journal of Operational Research, Elsevier, vol. 275(3), pages 957-970.
    11. Wong, H. & van Houtum, G.J. & Cattrysse, D. & Oudheusden, D. Van, 2006. "Multi-item spare parts systems with lateral transshipments and waiting time constraints," European Journal of Operational Research, Elsevier, vol. 171(3), pages 1071-1093, June.
    12. T W Archibald, 2007. "Modelling replenishment and transshipment decisions in periodic review multilocation inventory systems," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 58(7), pages 948-956, July.
    13. Ying Rong & Lawrence V. Snyder & Yang Sun, 2010. "Inventory sharing under decentralized preventive transshipments," Naval Research Logistics (NRL), John Wiley & Sons, vol. 57(6), pages 540-562, September.
    14. Satır, Benhür & Savasaneril, Secil & Serin, Yasemin, 2012. "Pooling through lateral transshipments in service parts systems," European Journal of Operational Research, Elsevier, vol. 220(2), pages 370-377.
    15. Tiacci, Lorenzo & Saetta, Stefano, 2011. "A heuristic for balancing the inventory level of different locations through lateral shipments," International Journal of Production Economics, Elsevier, vol. 131(1), pages 87-95, May.
    16. Olsson, Fredrik, 2010. "An inventory model with unidirectional lateral transshipments," European Journal of Operational Research, Elsevier, vol. 200(3), pages 725-732, February.
    17. Nils Rudi & Sandeep Kapur & David F. Pyke, 2001. "A Two-Location Inventory Model with Transshipment and Local Decision Making," Management Science, INFORMS, vol. 47(12), pages 1668-1680, December.
    18. Olsson, Fredrik, 2009. "Optimal policies for inventory systems with lateral transshipments," International Journal of Production Economics, Elsevier, vol. 118(1), pages 175-184, March.
    19. Tagaras, George, 1999. "Pooling in multi-location periodic inventory distribution systems," Omega, Elsevier, vol. 27(1), pages 39-59, February.
    20. Frank Schneider & Ulrich W. Thonemann & Diego Klabjan, 2018. "Optimization of Battery Charging and Purchasing at Electric Vehicle Battery Swap Stations," Transportation Science, INFORMS, vol. 52(5), pages 1211-1234, October.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:inm:ormnsc:v:49:y:2003:i:9:p:1168-1179. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Asher (email available below). General contact details of provider: https://edirc.repec.org/data/inforea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.