Multi‐location transshipment problem with capacitated production

Multi‐location transshipment problem with capacitated production

0.00 Avg rating0 Votes
Article ID: iaor2013845
Volume: 226
Issue: 3
Start Page Number: 425
End Page Number: 435
Publication Date: May 2013
Journal: European Journal of Operational Research
Authors: , ,
Keywords: inventory, production, location
Abstract:

We consider coordination among stocking locations through replenishment strategies that explicitly take into account lateral transshipments, i.e., transfer of a product among locations at the same echelon level. Our basic contribution is the incorporation of supply capacity into the traditional transshipment model. Our goal is to analyze the impact on system behavior and on stocking locations’ performance of the fact that the supplier may fail to fulfill all the replenishment orders. We therefore formulate the capacitated supply scenario as a network flow problem embedded in a stochastic optimization problem, which is solved through a sample average approximation method. We find that, depending on the production capacity, system behavior can vary drastically. Moreover, in a production‐inventory system, we find evidence that either capacity flexibility (i.e., extra production) or transshipment flexibility (i.e., pooling) is required to maintain a desired level of service.

Reviews

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 Your email address will not be published.