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Transshipment and Its Impact on Supply Chain Members' Performance

Author

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  • Jun Zhang

    (A. B. Freeman School of Business, Tulane University, New Orleans, Louisiana 70118)

Abstract

This note extends some of the key results of Dong and Rudi (2004) to general demand distributions. This generalization is achieved in two steps. First, we build on the analysis of Dong and Rudi to demonstrate that an inventory problem with transshipment is equivalent to a newsvendor problem with an adjusted demand. Then, we study the impact of transshipment by comparing the adjusted demand with the original demand. In addition to extending the results in the existing literature, this note presents a novel approach for analyzing the impact of risk pooling.

Suggested Citation

  • Jun Zhang, 2005. "Transshipment and Its Impact on Supply Chain Members' Performance," Management Science, INFORMS, vol. 51(10), pages 1534-1539, October.
    • Handle: RePEc:inm:ormnsc:v:51:y:2005:i:10:p:1534-1539
    DOI: 10.1287/mnsc.1050.0397
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    References listed on IDEAS

    as
    1. Lingxiu Dong & Nils Rudi, 2004. "Who Benefits from Transshipment? Exogenous vs. Endogenous Wholesale Prices," Management Science, INFORMS, vol. 50(5), pages 645-657, May.
    2. Bawa, Vijay S., 1975. "Optimal rules for ordering uncertain prospects," Journal of Financial Economics, Elsevier, vol. 2(1), pages 95-121, March.
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