Approximate dynamic programming for lateral transshipment problems in multi-location inventory systems

Joern Meissner and Olga V. Senicheva

European Journal of Operational Research, 2018, vol. 265, issue 1, 49-64

Abstract: Companies commonly allocate their inventories across multiple locations based on their historical sales rates. However, random fluctuations in customer purchases, such as those caused by weather conditions and other external factors, might cause significant deviations from expected demand, leading to excess stock in some locations and stockouts in others. To fix this mismatch, companies often turn to lateral transshipments, e.g., the movement of stock between locations of the same echelon.

Keywords: Dynamic programming; Multi-location inventory; Proactive transshipments; Lost sales; Concave piecewise-linear approximation (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (19)

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Working Paper: Approximate Dynamic Programming for lateral transshipment problems in multi-location inventory systems (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:265:y:2018:i:1:p:49-64

DOI: 10.1016/j.ejor.2017.06.049

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