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EFFECTIVENESS OF STOCK TRANSSHIPMENT UNDER VARIOUS DEMAND DISTRIBUTIONS AND NONNEGLIGIBLE TRANSSHIPMENT TIMES*
Author(s) -
TAGARAS GEORGE,
VLACHOS DIMITRIOS
Publication year - 2002
Publication title -
production and operations management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 3.279
H-Index - 110
eISSN - 1937-5956
pISSN - 1059-1478
DOI - 10.1111/j.1937-5956.2002.tb00490.x
Subject(s) - pooling , transshipment (information security) , stocking , stock (firearms) , computer science , operations research , operations management , business , economics , mathematics , engineering , mechanical engineering , artificial intelligence , fishery , biology
This paper investigates the operational characteristics of a pooling group consisting of two stocking locations, supplied periodically by a central warehouse. The two locations may collaborate by moving inventory between them. The lateral transshipment times are shorter than the regular replenishment lead times, but they are not negligible. Several alternative types of ordering and transshipment policies are examined. Extensive experimentation by simulation leads to the conclusion that the benefits of risk pooling are substantial only when demand is highly variable. Moreover, the type and variability of the demand distributions are key determinants of the appropriate transshipment policy and pooling groups design.