Paper Info
Title
Optimal transshipments and reassignments under periodic or cyclic holding cost accounting.
Abstract
In a centrally managed system, inventory at a retailer can be transshipped to a stocked-out retailer to meet demand. As the inventory at the former retailer may be demanded by future customers of that retailer and transshipment time/cost is non-negligible, it can be more profitable to not transship in some situations. When unsatisfied demand is backordered, reassignment of inventory to a previously backordered demand can perhaps become profitable as demand uncertainty resolves over time. Despite this intuition, we prove that no reassignments are necessary for cost optimality under periodic holding cost accounting in a two-retailer system. This remains valid for multi-retailer systems according to numerical analyses. When holding costs are accounted for only at the end of each replenishment cycle, reassignments are necessary for optimality but insignificant in reducing the total cost. In most instances tested, the decrease in total cost from reassignments is below 2% for end of cycle holding cost accounting. These results simplify transshipment policies and facilitate finding good policies in both implementation and future studies, as reassignments can be omitted from consideration in optimization models under periodic holding cost accounting and in approximation models under cyclical cost accounting.
Year
DOI
Venue
2013
10.1057/jors.2012.135
JORS
Keywords
Field
DocType
inventory sharing,centrally managed inventory,stochastic inventory control
Transshipment,Accounting,Computer science,Holding cost,Microeconomics,Intuition,Carrying cost,Periodic graph (geometry),Total cost,Operations management,Cost accounting
Journal
Volume
Issue
ISSN
64
10
0160-5682
Citations 
PageRank 
References 
1
0.35
20
Authors
3
Name
Order
Citations
PageRank
Nagihan Çömez1111.27
Metin Çakanyildirim215012.59
Kathryn E. Stecke3748.48