Stochastic optimization for transshipment problems with positive replenishment lead times

Stochastic optimization for transshipment problems with positive replenishment lead times

0.00 Avg rating0 Votes
Article ID: iaor201110541
Volume: 135
Issue: 1
Start Page Number: 61
End Page Number: 72
Publication Date: Jan 2012
Journal: International Journal of Production Economics
Authors: ,
Keywords: stochastic processes, combinatorial optimization, heuristics
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.

Reviews

Required fields are marked *. Your email address will not be published.