A distribution inventory model with transshipments from a support warehouse

Sven Axsäter, Christian Howard and Johan Marklund

IISE Transactions, 2013, vol. 45, issue 3, 309-322

Abstract: This article considers a distribution inventory system consisting of N retailers and a regional support warehouse, all being replenished from a central warehouse/outside supplier. For the case where stock-outs occur, the retailers receive transshipments from the support warehouse at an extra cost. A model is presented for cost evaluation and optimization of the reorder points in the system under fill rate constraints. The solution method is designed to handle large real-life systems and is fast enough to be directly implemented in practice. A numerical study illustrates that (i) the model renders near-optimal solutions; (ii) the value of using a support warehouse can be significant even for large transshipment costs; and (iii) significant cost savings can be obtained using the proposed model. Using real data for a sample of 50 representative products, the proposed model reduces the expected holding and transshipment costs by 29% while still meeting target fill rates.[Supplemental materials are available for this article. Go to the publisher's online edition of IIE Transactions to view the supplemental file.]

Date: 2013
References: Add references at CitEc
Citations: View citations in EconPapers (21)

Downloads: (external link)
http://hdl.handle.net/10.1080/0740817X.2012.706375 (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:taf:uiiexx:v:45:y:2013:i:3:p:309-322

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/uiie20

DOI: 10.1080/0740817X.2012.706375

Access Statistics for this article

IISE Transactions is currently edited by Jianjun Shi

More articles in IISE Transactions from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().