Optimizing Centralized Inventory Systems Using Lateral Transshipments

Optimizing Centralized Inventory Systems Using Lateral Transshipments

Elleuch Fadwa (University of Sfax, Tunisia)
Copyright: © 2025 |Pages: 23
DOI: 10.4018/IRMJ.369816
Article PDF Download
Open access articles are freely available for download

Abstract

This study explores the optimization of centralized inventory systems through lateral transshipments, addressing supply chain disruptions caused by unpredictable demand. Lateral transshipments, which involve reallocating stock among retailers at the same distribution level, were investigated as a cost-effective and service-enhancing alternative to traditional emergency restocking methods. Using simulation and optimization techniques, we analyzed various transshipment policies, including Complete-Pooling and Partial-Pooling, across multiple scenarios. Our findings highlight that Partial-Pooling with an optimized threshold outperformed other policies by balancing collaboration and efficiency, reducing total costs, and improving service levels. The results underscore the importance of hybrid transshipment strategies, particularly for high-demand and cost-sensitive inventory systems. The research provides actionable insights for supply chain managers how tailored transshipment policies enhance centralized system overall supply chain resilience, profitability, and customer satisfaction.
Article Preview
Top

1. Introduction

Effective supply chain management (SCM) is currently identified as a key determinant of competitiveness and success for most manufacturing and retail organizations, because the execution of supply chain management has a significant impact on cost and service level. SCM aims to control the entire flow of a supply chain (physical flow, information flow and financial flow). In this paper we are mainly focused on the management of physical flows in the supply chain. Currently, many quantitative models have been proposed to provide decision support for the management of materials in a supply chain. The overall execution of the distribution network, whether evaluated in economic terms or in terms of customer service, can be significantly improved if retailers collaborate in the event of unexpectedly high demand, which may result in shortages in one or more retail outlets.

Collaboration usually takes the form of “Transshipment - lateral” or also simply “Transshipment”, which serves to pool stocks to overcome uncertainties in demand arriving at sites at the same level, and thus to obtain effects similar to those of inventory consolidation. Transshipment can also generate additional service flexibility. Note that, for the same service rate, transshipment is generally significantly less expensive than an emergency order from a supplier if the lateral sites are located nearby.

For this work will be carried out, in section 5 we have applied the two-step resolution methodology. Then, section 6 presents the results found by applying the simulation and optimization approach obtained. Finally, the conclusion is made in section 7.

Complete Article List

Search this Journal:
Reset
Volume 38: 1 Issue (2025)
Volume 37: 1 Issue (2024)
Volume 36: 1 Issue (2023)
Volume 35: 4 Issues (2022): 3 Released, 1 Forthcoming
Volume 34: 4 Issues (2021)
Volume 33: 4 Issues (2020)
Volume 32: 4 Issues (2019)
Volume 31: 4 Issues (2018)
Volume 30: 4 Issues (2017)
Volume 29: 4 Issues (2016)
Volume 28: 4 Issues (2015)
Volume 27: 4 Issues (2014)
Volume 26: 4 Issues (2013)
Volume 25: 4 Issues (2012)
Volume 24: 4 Issues (2011)
Volume 23: 4 Issues (2010)
Volume 22: 4 Issues (2009)
Volume 21: 4 Issues (2008)
Volume 20: 4 Issues (2007)
Volume 19: 4 Issues (2006)
Volume 18: 4 Issues (2005)
Volume 17: 4 Issues (2004)
Volume 16: 4 Issues (2003)
Volume 15: 4 Issues (2002)
Volume 14: 4 Issues (2001)
Volume 13: 4 Issues (2000)
Volume 12: 4 Issues (1999)
Volume 11: 4 Issues (1998)
Volume 10: 4 Issues (1997)
Volume 9: 4 Issues (1996)
Volume 8: 4 Issues (1995)
Volume 7: 4 Issues (1994)
Volume 6: 4 Issues (1993)
Volume 5: 4 Issues (1992)
Volume 4: 4 Issues (1991)
Volume 3: 4 Issues (1990)
Volume 2: 4 Issues (1989)
Volume 1: 1 Issue (1988)
View Complete Journal Contents Listing