Abstract
With the advent of information technology, retailers have easy access to forecast updates to adjust inventory as the selling season approaches. Rather than giving a second ordering chance, this paper takes lateral transshipment as an alternative, and investigates the transshipment policies in a supplier with two independent asymmetric retailers with a single selling season under both independent and competitive market scenarios. The results show that in the presence of the capital-constrained retailer’s default risk, the capital sufficient retailer is not always preferring to transship out. In the numerical analysis, we find the transshipment policies under competitive scenario are stricter than those under independent scenario.
Highlights
In supply chain has posed a great challenge for managers, many researchers have focused on inventory management to reduce risks and decrease system cost
Lateral transshipment refers to the stock movement within the same echelon of an inventory system which is extensively applied in practice to reduce inventory imbalances
Proposition 4 and Figure 4 indicate that given the optimal transshipment strategy with different market, retailer j prefer to transship less with competitive market, which is intuitive that market competition induce retailer j inventory more and lower the transshipment quantity to satisfy more switcher to make an extra profit at sale price p, which is higher than transshipping out at transshipment price λ
Summary
In supply chain has posed a great challenge for managers, many researchers have focused on inventory management to reduce risks and decrease system cost. We refer to supplying chain financial transshipment strategy as another way to increase inventory when the retailer has limited capital, and discuss retailers’ operation strategy when one retailer is capital constrained and delay to pay for transshipment payment until sales ending. BeLLE is able to serve its customers in a timely fashion shoe through transshipment from surplus retailer to under-stock retailer under both retailers’ market demand continue to realize. Under the competitive market scenario, whether surplus retailer can benefit from transshipment depends on two variables: the transshipment quantity and the number of switch customers. We propose the optimal dynamic transshipment policies based on the number of switching customers, we show that market competition is an incentive to surplus retailer to reduce transshipment quantity.
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