 Enhanced lateral transshipments in a multi-location inventory systemColin Paterson, Ruud Teunter and Kevin Glazebrook European Journal of Operational Research, 2012, vol. 221, issue 2, 317-327 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. Keywords: Inventory control; Lateral transshipments; Dynamic programming (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:221:y:2012:i:2:p:317-327 DOI: 10.1016/j.ejor.2012.03.005 Access Statistics for this article European Journal of Operational Research is currently edited by Roman Slowinski, Jesus Artalejo, Jean-Charles. Billaut, Robert Dyson and Lorenzo Peccati More articles in European Journal of Operational Research from Elsevier |
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