Inventory control policy of preventive lateral transshipment between retailers in multi periods

• He, Qing Ren ^[1] ; Dan, Bin ^[1] ; Liu, Ru ^[1]
  1. [1] Chongqing University

     Chongqing University

     China

     
• Localización: Journal of Industrial Engineering and Management, ISSN-e 2013-0953, Vol. 7, Nº. 3, 2014, págs. 681-697
• Idioma: inglés
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• Resumen

  • Purpose: Preventivelateral transshipment can respond to customers who will choose a substitute or to give up when the product is out of stock. Motivatedby the common practice, adecision-making model of preventive lateral transshipment with multi sellingperiods is developed. The purpose of the paper is to explore the optimal preventive lateral transshipment policy with multi selling periods.Design/methodology/approach: With adiscrete-time dynamic programming model, we take a dynamic programming approach and adopt backward induction to analyze two retailers’ preventive lateral transshipment policy.Findings: The optimal preventivelateral transshipment policy is a threshold policy which depends on both theremaining selling periods and inventory level. The above properties ensure thattwo retailers can control inventory with preventive lateral transshipment.Practical implications: The retailer can adjust inventory via the thresholdtype policy. The simple decisionrule which compares on-hand inventory level with the critical inventory level can be used to control inventory by preventive lateral transshipment.Originality/value: A discrete-timedecision-making model of preventive lateral transshipment policy isformulated. This model takes consideration of multi selling periods, whichis different from most existing researches on preventive lateraltransshipment.