Modelling replenishment and transshipment decisions in periodic review multilocation inventory systems

T W Archibald ()
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T W Archibald: University of Edinburgh

Journal of the Operational Research Society, 2007, vol. 58, issue 7, 948-956

Abstract: Abstract Effective models of key operational decisions in multilocation inventory systems are important for a successful retail sector. This paper argues that much of the existing research in this area is not applicable to a highly competitive retail environment, particularly if periodic review replenishment policies are used. The paper develops a model of a periodic review multilocation inventory system that is suitable for this environment and investigates the characteristics of optimal replenishment and transshipment decisions. This motivates the development of three simple heuristic transshipment policies that are practical for systems with many locations. The results of a numerical study involving systems with five locations suggest that the performance of these heuristic policies is often close to optimal and can be considerably better than the performance of commonly used policies.

Keywords: inventory; dynamic programming; Markov decision processes; transshipment; retail (search for similar items in EconPapers)
Date: 2007
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Citations: View citations in EconPapers (16)

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DOI: 10.1057/palgrave.jors.2602217

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