Emergency Lateral Transshipment Research Articles

Evaluation of two transshipment policies in a two-location decentralized inventory system under partial backordering

This research investigates the replenishment and transshipment decisions in a two-retailer inventory system with a single selling season. Both emergency lateral transshipment (ELT) and preventive lateral transshipment (PLT) are investigated. ELT satisfies partial backordering. We prove the existence of unique Nash equilibrium for the system under each policy. The results show that the ELT solution is independent of the transshipment price while the PLT solution converges to the newsvendor solution as the transshipment price increases. Numerical analysis is presented to illustrate the advantage of each policy. This study assists retailers in deciding which transshipment policy should be preferred.

An Application of SLA in Small Business Sectors with Multi Item Inventory Management.

Lateral transshipment plays an important role in inventory management. As the extension the service level adjustment (SLA) which combines preventive lateral transshipment with emergency lateral transshipment, increase the system performance level and decrease the total cost of the system in small business sector. At finally we give a numerical study of multi item small business sector, we examine SLA will be more effective in multi item small business sectors.

Lateral Transshipment Model in the Same Echelon Storage Sites

In case of one-product, one-period, normal distribution demand, emergency lateral transshipment instant arrival, four transshipment rules in the same echelon storage sites are discussed in this paper. They are onetime and full-sharing transshipment, one-time and partial-sharing transshipment, multiple-time and full-sharing transshipment, and multiple-time and partial-sharing transshipment. A total cost model is constituted on the factors of transshipment cost and shortage cost. Numerical experiments show that multiple-time transshipment can avoid the shortage risk of supply location; partial-sharing transshipment can drive down the shortage risk of supply location; decision of transshipment rule mostly depends on unit cost of transshipment, unit cost of shortage, and distance between the storage sites.

A way for reducing drug supply chain cost for a hospital district: A case study

Purpose: This work aims at providing insights to optimise healthcare logistic of the drug management, in order to deal with the healthcare expenditure cut. In this paper the effects of different drug supply chain configurations, on the resulting average stock, service level and Bullwhip effect, of the studied supply chain, is quantitatively assessed. Design/methodology/approach: A case study of an Italian district has been studied, taking into account three echelons: suppliers, central stock, and hospitals. A model of the various supply chain configurations has been created with the use of the simulation. Specifically, 24 supply chain configurations have been examined, stemming from the combination of several supply chain design parameters, namely: transshipment policies (Emergency Lateral Transshipment or Total Inventory Equalization); re-order and inventory management policies (Economic Order Quantity or Economic Order Interval); required service levels (90% or 95%); the number of available vans (one or two). For each configuration, hospital average stock, service level and a “Bullwhip effect” analysis are computed. To know which input variables are statistically significant, a DoE (Design of Experiments) analysis has been executed. Findings: The output of this paper provides useful insights and suggestions to optimize the healthcare logistic and drug supply chain. According to the developed DoE analysis, it can be stated that the introduction of transshipment policies provides important improvement in terms of service and stock levels. To reduce the Bullwhip effect, which results in a service level decreasing, and in a managing stock costs increasing, it is worth to adopt an EOQ re-order policy. Practical implications: This research gives practical recommendations to the studied system, in order to reduce costs and maintain a very satisfactory service level. Originality/value: This paper fulfils an identified need to study which combination of transshipment policies, re-order/inventory management policies and required service levels, can be the best one to reduce costs and maintain a very satisfactory service level, in the specific logistic system.

Emergency lateral transshipments in a two-location inventory system with positive transshipment leadtimes

Abstract We consider a single-echelon continuous review inventory system for spare parts with two parallel locations. Each location faces independent Poisson demand and backorders are allowed. In this paper we consider the possibility of lateral transshipments between the locations. The transshipment leadtime is positive and deterministic, and there is an additional cost for making a transshipment. We suggest a transshipment policy which is based on the timing of all outstanding orders, and develop and solve a heuristic model by using theory and concepts from doubly stochastic Poisson processes and also partial differential equations. A simulation study indicates that our heuristic works very well, and that the relative cost increase of disregarding the transshipment leadtime may be quite high. Our results also indicate that it is, in general, worth the effort of reducing the transshipment leadtime, even if it is already relatively short.

Inventory distribution problem via stochastic programming

Previous research on inventory distributions between local warehouses or retailers (bases) has focused separately on either of two types of stock transshipment policies: preventive lateral transshipments or emergency lateral transshipments. Each of these has its advantages and disadvantages, and combining these policies may well enable merchandisers to achieve higher service levels. Thus, the combined use of these policies is the focus of the present study. A stochastic programming problem is formulated with demand as a stochastic variable, and the policy of using both preventive and emergency lateral transshipment is examined for its effectiveness while solution methods are examined for their efficiency.

Batch Ordering Policy of Multi-location Spare Parts Inventory System with Emergency Lateral Transshipments

Abstract A batch ordering model for multi-location spare parts inventory system with emergency lateral transshipments is provided, and algorithms for calculating the probabilities of demand fulfillment by inventory point self, by transshipment, or backorder are also given. Based on these, a procedure is given to find the best ordering point for a constrained model that minimizes holding plus transshipment cost subject to a certain service level, assuming the ordering quantity is predetermined. The results were tested through simulation.

Insights into inventory sharing in service parts logistics systems with time-based service levels

Service parts logistics systems are usually characterized by very low random demand, high part cost, and target time-based service levels, all of which lead inventory planners to utilize inventory sharing or “emergency lateral transshipments” across multiple stocking locations. Using a stylized model with one central warehouse and multiple local stocking locations, we seek insights into the behavior of an inventory sharing system with time-based service level considerations. The goal of inventory sharing is to satisfy a demand in case a local facility is out of stock, by meeting the demand with a direct delivery from another location that can provide the service within the time window necessary for the target service level. We adapt an existing model from the literature for such a system and study its performance in terms of cost and service level. In addition, we evaluate two-location and three-location scenarios to study the effect of having additional stocking locations.

An effective lateral transshipment policy to improve service level in the supply chain

A new lateral transshipment policy, called service level adjustment (SLA), is proposed. SLA differs from previous policies by integrating emergency lateral transshipment with preventive lateral transshipment to efficiently respond to customer demands. Additionally, the proposed policy considers the service level to decide the quantity for lateral transshipment. Experiments simulating a two-echelon supply chain were conducted. The proposed policy has lower total costs than previous transshipment policies. Moreover, our policy more effectively responds to changes in demands, penalty cost, and ordering cost.

A Multiechelon Repairable Item Inventory System with Lateral Transshipment and a General Repair Time Distribution

This paper discusses the determination of the spare inventory level for a multiechelon repairable item inventory system, which has several bases and a central depot with emergency lateral transshipment capability. Previous research is extended by removing a restrictive assumption on the repair time distribution. A mathematical model that allows a general repair time distribution, as well as an algorithm to find a solution of the model, is developed. Thus, the main focus of this study is to improve the accuracy of previous models and to estimate the gain in accuracy from use of the current methodology. Computational experiments are performed to estimate the accuracy improvement and to determine the managerial implications of the results.

Evaluation of unidirectional lateral transshipments and substitutions in inventory systems

One interpretation of the model considered in this paper is a single-echelon inventory system consisting of a number of local warehouses, which normally replenish from an outside supplier. In case of a stockout at a warehouse an emergency lateral transshipment from another warehouse may be possible. However, such transshipments are only allowed in one direction, i.e., the flow structure is unidirectional. Such policies can be of interest if the warehouses have very different shortage costs. Another interpretation is substitution in an inventory system. We then instead consider different items in a single warehouse. When a demand for a low quality item cannot be met directly, the item can be replaced by another high quality item. We provide a simple and efficient approximate technique for policy evaluation in such systems. The performance of this technique is evaluated in a simulation study. Although the errors are not always negligible, the suggested method gives a good picture of how the considered lateral transshipments or substitutions affect the inventory system.

An improved heuristic for deciding on emergency transshipments

Utilising emergency lateral transshipments between retailers to meet customer demand can be an effective means for companies to improve service levels and/or reduce costs. This paper provides a decision rule for how much (if any) to source and from which retailer(s), taking into account the financial impact of the transshipment decision on future service levels and the timing of subsequent orders from suppliers. While the model explicitly recognises fixed and variable transshipment costs, as well as information on orders en route to retailers, it is simple enough to facilitate real-time execution and/or implementation on a spreadsheet. Simulation results indicate significant improvement on recently published results. We illustrate the method using several examples and discussing sensitivity to key parameters.

A model for multi-location inventory problems

In this paper we consider inventory systems of multi-location. It is common to allow emergency lateral transshipments from local locations to the main depot. Here we propose a new model for the inventory system of consumable items. The inventory system of each location and the main depot is modeled by Markovian queueing networks. The transshipments are modeled by the Markov Modulated Poisson Process which is a generalization of the Poisson process.

Markov-modulated Poisson processes for multi-location inventory problems

In this paper we consider inventory systems of multi-location. It is common to allow emergency lateral transshipments from local locations to the main depot. Here we propose a new model for the inventory system of consumable items. The inventory system of each location and the main depot is modeled by Markovian queueing networks. The transshipments are modeled by the Markov-Modulated Poisson Process (MMPP) which is a generalization of the Poisson process.

Modelling Emergency Lateral Transshipments in Inventory Systems

In inventory systems with several bases that support different geographical regions, it is quite common to allow emergency lateral transshipments between the bases. This may be advantageous if neighbouring bases are at shorter distances than the central depot or the external supplier. This paper provides a new technique for modelling such lateral transshipments in continuous review inventory systems with one-for-one replenishments and Poisson demand. We apply this technique to a two-echelon system with repairable items.

A Multi-Echelon Inventory Model for Repairable Items with Emergency Lateral Transshipments

In multi-echelon inventory systems that cover extensive geographical regions, emergency lateral transshipment between bases is commonly practiced to provide improved service support for products. In these systems, since neighboring bases are at shorter distances than to the depot, the base may seek stock from them to satisfy its demands when it is out of stock. In this paper we develop a continuous-review multi-echelon model for repairable items when emergency lateral transshipments between identical bases are allowed. Approximations are derived and tested for the expected level of backorders and the quantity of emergency lateral transshipments in cases where fairly high service levels are required. These approximations are used to determine the optimal stocking levels in such a system. A procedure to find these stocking levels is given. Numerical examples illustrate the application of the procedure and the tradeoffs involved in emergency lateral transshipment.

A Multi-Echelon Inventory Model for Repairable Items with Emergency Lateral Transshipments

In multi-echelon inventory systems that cover extensive geographical regions, emergency lateral transshipment between bases is commonly practiced to provide improved service support for products. I...