Article ID: | iaor20063057 |
Country: | South Korea |
Volume: | 30 |
Issue: | 1 |
Start Page Number: | 17 |
End Page Number: | 26 |
Publication Date: | Mar 2005 |
Journal: | Journal of the Korean ORMS Society |
Authors: | Lee Young Hae, Jeon Young Sang, Jung Jung Woo |
Keywords: | distribution |
There is the uncertainty of demands at each retailer in the supply chain. To satisfy customers' demand, retailer must have enough inventory. Nevertheless, stockout is occurred for some retailers. A lateral transshipment policy can be effectively used to deal with stockout. The new lateral transshipment policy, referred to service level adjustment (SLA), is suggested. The difference between SLA and previous policies is the integration of an emergency lateral transshipment with a preventive lateral transshipment to efficiently respond to customer's demand in the proposed policy. Additionally, the service level to decide the quantity of products is considered. Simulation experiment is executed to treat stochastic factors in the two-echelon supply chain. The proposed policy can reduce total cost and is more effective to the change of demand, penalty cost, and ordering cost than the currently used policies.