A Semi-Markov decision problem for proactive and reactive transshipments between multiple warehouses

Arkadi Seidscher, Stefan Minner

Research output: Contribution to journalArticlepeer-review

37 Scopus citations

Abstract

Lateral transshipments are an effective strategy to pool inventories. We present a Semi-Markov decision problem formulation for proactive and reactive transshipments in a multi-location continuous review distribution inventory system with Poisson demand and one-for-one replenishment policy. For a two-location model we state the monotonicity of an optimal policy. In a numerical study, we compare the benefits of proactive and different reactive transshipment rules. The benefits of proactive transshipments are the largest for networks with intermediate opportunities of demand pooling and the difference between alternative reactive transshipment rules is negligible.

Original languageEnglish
Pages (from-to)42-52
Number of pages11
JournalEuropean Journal of Operational Research
Volume230
Issue number1
DOIs
StatePublished - 1 Oct 2013

Keywords

  • Inventory control
  • Lateral transshipments
  • Markov decision problem
  • Multiple locations

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