The Multi-Location Transshipment Problem with Positive Replenishment Lead Times
2006-09-07
Research Paper
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Transshipments, monitored movements of material at the same echelon of a supply chain, represent an effective pooling mechanism. With a single exception, research on transshipments overlooks replenishment lead times. The only approach for two-location inventory systems with non-negligible lead times could not be generalized to a multi-location setting, and the proposed heuristic method cannot guarantee to provide optimal solutions. This paper uses simulation optimization by combining an LP/network flow formulation with infinitesimal perturbation analysis to examine the multi-location transshipment problem with positive replenishment lead times, and demonstrates the computation of the optimal base stock quantities through sample path optimization. From a methodological perspective, this paper deploys an elegant duality-based gradient computation method to improve computational efficiency. In test problems, our algorithm was also able to achieve better objective values than an existing algorithm.
- C61 : Optimization Techniques; Programming Models; Dynamic Analysis
- M11 : Production Management
- M : Business Administration and Business Economics; Marketing; Accounting
- R4 : Transportation Systems
- R41 : Transportation: Demand; Supply; Congestion; Safety and Accidents
- period
- stock
- transshipment
- demand
- replenishment
- retailer i
- inventory
- algorithm
- problem
- retailer
- system
- base stock levels
- period t
- base stock
- value
- order
- location
- gradient
- proof
- figure
