Stochastic optimization for transshipment problems with positive replenishment lead times

Yeming Gong () and Enver Yucesan
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Yeming Gong: EM - EMLyon Business School
Enver Yucesan: INSEAD - Institut Européen d'administration des Affaires

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Abstract: Transshipments, monitored movements of material at the same echelon of a supply chain, represent an effective pooling mechanism. Earlier papers dealing with transshipments either do not incorporate replenishment lead times into their analysis, or only provide a heuristic algorithm where optimality cannot be guaranteed beyond settings with two locations. This paper uses infinitesimal perturbation analysis by combining with a stochastic approximation method to examine the multi-location transshipment problem with positive replenishment lead times. It demonstrates the computation of optimal base stock quantities through sample path optimization. From a methodological perspective, this paper deploys a duality-based gradient computation method to improve computational efficiency. From an application perspective, it solves transshipment problems with non-negligible replenishment lead times. A numerical study illustrates the performance of the proposed approach.

Keywords: Supply chain management; Stochastic optimization; Transshipment; Simulation (search for similar items in EconPapers)
Date: 2012-01-01
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Citations: View citations in EconPapers (3)

Published in International Journal of Production Economics, 2012, 135 (1), 61-72 p. ⟨10.1016/j.ijpe.2010.09.020⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-02312630

DOI: 10.1016/j.ijpe.2010.09.020

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