Managing transshipments in a multi-retailer system with approximate policies

Nagihan Çömez-Dolgan and Nilgun Fescioglu-Unver
Additional contact information
Nagihan Çömez-Dolgan: Bilkent University, Ankara, Turkey
Nilgun Fescioglu-Unver: TOBB University of Economics and Technology, Ankara, Turkey

Journal of the Operational Research Society, 2015, vol. 66, issue 6, 947-964

Abstract: Using the right transshipment policy is important when transshipments are exercised under demand uncertainty. Optimal transshipment policy can be quite complex in a multi-firm system as optimal actions depend on all system variables. Moreover, both how to select requested retailer and how to respond to requests are in question. We introduce simple, close-to-optimal heuristic transshipment policies for multiple retailers. We first show that heuristic policies may perform even better than self-optimal policy, which is explained by Braess’s paradox. Then we test the performances of various heuristics with respect to centrally optimal policy. When retailers can observe others’ inventory levels, more effective transshipments can be made. Otherwise, a random selection performs quite well. We also observe that although always-accept respond policy is quite close to centrally optimal in small systems, the performance of pairwise-optimal holdback levels to respond requests is more clear and consistent for larger systems.

Date: 2015
References: Add references at CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://www.palgrave-journals.com/jors/journal/v66/n6/pdf/jors201459a.pdf Link to full text PDF (application/pdf)
http://www.palgrave-journals.com/jors/journal/v66/n6/full/jors201459a.html Link to full text HTML (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pal:jorsoc:v:66:y:2015:i:6:p:947-964

Ordering information: This journal article can be ordered from
http://www.springer. ... search/journal/41274

Access Statistics for this article

Journal of the Operational Research Society is currently edited by Tom Archibald and Jonathan Crook

More articles in Journal of the Operational Research Society from Palgrave Macmillan, The OR Society
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().