A simulation study of lateral shipments in single supplier, multiple buyers supply chain networks

This study examines the effects, in terms of some selected criteria, of two lateral (intra-echelon) transshipment approaches in a two-echelon supply chain network, with a single supply source at the higher echelon and multiple retail locations at the lower, through a series of simulation experiments under different operating conditons. An important finding is that either of the proposed lateral shipment approaches are considerably superior to a policy of no such shipments, albeit at the expense of increased transportation activity. Further, an ad hoc emergency transshipment approach appears to be significantly more effective in terms of several important criteria, as compared to a more systematic transshipment technique based on stock level equalization.