Enhanced lateral transshipments in a multi-location inventory system

Paterson, Colin and Teunter, Ruud and Glazebrook, Kevin (2012) Enhanced lateral transshipments in a multi-location inventory system. European Journal of Operational Research, 221 (2). pp. 317-327. ISSN 0377-2217

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Abstract

In managing an inventory network, two approaches to the pooling of stock have been proposed. Reactive transshipments respond to shortages at a location by moving inventory from elsewhere within the network, while proactive stock redistribution seeks to minimize the chance of future stockouts. This paper is the first to propose an enhanced reactive approach in which individual transshipments are viewed as an opportunity for proactive stock redistribution. We adopt a quasi-myopic approach to the development of a strongly performing enhanced reactive transshipment policy. In comparison to a purely reactive approach to transshipment, service levels are improved while a reduction in safety stock levels is achieved. The aggregate costs incurred in managing the system are significantly reduced, especially so for large networks. Moreover, an optimal policy is determined for small networks and it is shown that the enhanced reactive policy substantially closes the gap to optimality.

Item Type:
Journal Article
Journal or Publication Title:
European Journal of Operational Research
Uncontrolled Keywords:
/dk/atira/pure/researchoutput/libraryofcongress/hb
Subjects:
ID Code:
55045
Deposited By:
Deposited On:
13 Jun 2012 12:35
Refereed?:
Yes
Published?:
Published
Last Modified:
19 Sep 2020 02:20