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A New Decision Rule for Lateral Transshipments in Inventory Systems

På svenska

Author

  • Sven Axsäter

Summary, in English

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.

Publishing year

2003

Language

English

Pages

1168-1179

Publication/Series

Management Science

Volume

49

Issue

9

Document type

Journal article

Publisher

Informs

Topic

  • Transport Systems and Logistics

Keywords

  • Inventory control
  • Studies
  • Management science
  • Stochastic models
  • Buffer inventories

Status

Published

ISBN/ISSN/Other

  • ISSN: 0025-1909