We consider a one-warehouse N retailers supply chain with stochastic demand. Inventory is managed in-house whereas transportation is outsourced to a 3PL provider. We develop analytical expressions for the operating characteristics under both periodic and continuous joint replenishment policies. We identify the settings where a periodic review policy is comparable to a continuous review one. In our numerical test-bed, the periodic policy performed best in larger supply chains operating with larger trucks. We also observed that if the excess utilization charge is less than 25%, outsourcing becomes beneficial even if outsourcing cost is 25% more than the in-house fleet costs.

Coordinated logistics, Inventory, Third party logistics, Transportation
dx.doi.org/10.1016/j.tre.2014.08.004, hdl.handle.net/1765/90522
Transportation Research Part E: Logistics and Transportation Review
Erasmus School of Health Policy & Management (ESHPM)

Gürler, U, Alp, O, & Büyükkaramikli, N.C. (2014). Coordinated inventory replenishment and outsourced transportation operations. Transportation Research Part E: Logistics and Transportation Review, 70, 400–415. doi:10.1016/j.tre.2014.08.004