Paper Info
Title
In-Season Transshipments Among Competitive Retailers
Abstract
A decentralized system of competing retailers that order and sell the same product in a sales season is studied. When a customer demand occurs at a stocked-out retailer, that retailer requests a unit to be transshipped from another retailer who charges a transshipment price. If this request is rejected, the unsatisfied customer may go to another retailer with a customer overflow probability. Each retailer decides on the initial order quantity from a manufacturer and on the acceptance/rejection of each transshipment request. For two retailers, we show that retailers' optimal transshipment policies are dynamic and characterized by chronologically nonincreasing inventory holdback levels. We analytically study the sensitivity of holdback levels to explain interesting findings, such as smaller retailers and geographically distant retailers benefit more from transshipments. Numerical experiments show that retailers substantially benefit from using optimal transshipment policies compared to no sharing. The expected sales increase in all but a handful of over 3,000 problem instances. Building on the two-retailer optimal policies, we suggest an effective heuristic transshipment policy for a multiretailer system.
Year
DOI
Venue
2012
10.1287/msom.1110.0364
Manufacturing & Service Operations Management
Keywords
Field
DocType
smaller retailer,competitive retailers,customer demand,customer overflow probability,in-season transshipments,geographically distant retailer,optimal transshipment policy,retailer request,transshipment price,transshipment request,stocked-out retailer,effective heuristic transshipment policy
Transshipment,Heuristic,Economics,Decentralised system,Microeconomics,Consumer satisfaction
Journal
Volume
Issue
ISSN
14
2
1523-4614
Citations 
PageRank 
References 
8
0.54
17
Authors
3
Name
Order
Citations
PageRank
Nagihan Çömez1111.27
Kathryn E. Stecke2748.48
Metin Çakanyildirim315012.59