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A New Decision Rule for Lateral Transshipments in Inventory Systems

Axsäter, Sven LU (2003) In Management Science 49(9). p.1168-1179
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... (More)
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. (Less)
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author
organization
publishing date
type
Contribution to journal
publication status
published
subject
keywords
Inventory control, Studies, Management science, Stochastic models, Buffer inventories
in
Management Science
volume
49
issue
9
pages
1168 - 1179
publisher
Informs
external identifiers
  • scopus:19244367480
ISSN
0025-1909
DOI
language
English
LU publication?
yes
id
41522e66-f165-4e0e-b63d-f435d78eb03b (old id 638623)
date added to LUP
2008-02-04 12:25:35
date last changed
2018-06-17 04:58:28
@article{41522e66-f165-4e0e-b63d-f435d78eb03b,
  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.},
  author       = {Axsäter, Sven},
  issn         = {0025-1909},
  keyword      = {Inventory control,Studies,Management science,Stochastic models,Buffer inventories},
  language     = {eng},
  number       = {9},
  pages        = {1168--1179},
  publisher    = {Informs},
  series       = {Management Science},
  title        = {A New Decision Rule for Lateral Transshipments in Inventory Systems},
  url          = {http://dx.doi.org/},
  volume       = {49},
  year         = {2003},
}