TY - JOUR
T1 - The multilocation transshipment problem
AU - Herer, Yale T.
AU - Tzur, Michal
AU - Yücesan, Enver
N1 - Funding Information:
This work has been supported by a grant of the Israeli Ministry of Science and AFIRST, Association Franco-Israélienne pour la Recherche Scientifique et Tech-nologique. The authors would also like to express their sincere appreciation for the programming support of Ann Larsson.
PY - 2006/3
Y1 - 2006/3
N2 - We consider a supply chain, which consists of several retailers and one supplier. The retailers, who possibly differ in their cost and demand parameters, may be coordinated through replenishment strategies and transshipments, that is, movement of a product among the locations at the same echelon level. We prove that in order to minimize the expected long-run average cost for this system, an optimal replenishment policy is for each retailer to follow an order-up-to S policy. Furthermore, we demonstrate how the values of the order-up-to quantities can be calculated using a sample-path-based optimization procedure. Given an order-up-to S policy, we show how to determine an optimal transshipment policy, using a linear programming/network flow framework. Such a combined numerical approach allows us to study complex and large systems.
AB - We consider a supply chain, which consists of several retailers and one supplier. The retailers, who possibly differ in their cost and demand parameters, may be coordinated through replenishment strategies and transshipments, that is, movement of a product among the locations at the same echelon level. We prove that in order to minimize the expected long-run average cost for this system, an optimal replenishment policy is for each retailer to follow an order-up-to S policy. Furthermore, we demonstrate how the values of the order-up-to quantities can be calculated using a sample-path-based optimization procedure. Given an order-up-to S policy, we show how to determine an optimal transshipment policy, using a linear programming/network flow framework. Such a combined numerical approach allows us to study complex and large systems.
UR - http://www.scopus.com/inward/record.url?scp=32144454334&partnerID=8YFLogxK
U2 - 10.1080/07408170500434539
DO - 10.1080/07408170500434539
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AN - SCOPUS:32144454334
SN - 0740-817X
VL - 38
SP - 185
EP - 200
JO - IIE Transactions (Institute of Industrial Engineers)
JF - IIE Transactions (Institute of Industrial Engineers)
IS - 3
ER -