Multilocation Inventory Systems With Centralized Information.

The management of multi-echelon inventory systems has been both an important and challenging research area for many years. The rapid advance in information technology and the emphasis on integrated supply chain management have new implications for the successful operation of distribution systems. This research focuses on the study of some fundamental issues related to the operation of a multilocation inventory system with centralized information. First, we do a comparative analysis to evaluate the overall performance of individual versus centralized ordering policies for a multi-store distribution system where centralized information is available. This study integrates the existing research and clarifies one of the fundamental questions facing inventory managers today: whether or not ordering decisions should be centralized. Next, we consider a multi-store distribution system where emergency transshipments are permitted among these stores. Based on some simplifying assumptions, we develop an integrated model with a joint consideration of inventory and transshipment components. An approximately optimal (s, S) policy is obtained through a dynamic programming technique. This ordering policy is then compared with a simplified policy that assumes free and instantaneous transshipments. We also examine the relative performance of base stock policies for a centralized-ordering distribution system. Numerical studies are provided to give general guidelines for use of the policies

Inventory models with lateral transshipments : a review

Lateral transshipments within an inventory system are stock movements between locations of the same echelon. These transshipments can be conducted periodically at predetermined points in time to proactively redistribute stock, or they can be used reactively as a method of meeting demand which cannot be satised from stock on hand. The elements of an inventory system considered, e.g. size, cost structures and service level denition, all in uence the best method of transshipping. Models of many dierent systems have been considered. This paper provides a literature review which categorizes the research to date on lateral transshipments, so that these dierences can be understood and gaps within the literature can be identied

The Multi-Location Transshipment Problem with Positive Replenishment Lead Times

Transshipments, monitored movements of material at the same echelon of a supply chain, represent an effective pooling mechanism. With a single exception, research on transshipments overlooks replenishment lead times. The only approach for two-location inventory systems with non-negligible lead times could not be generalized to a multi-location setting, and the proposed heuristic method cannot guarantee to provide optimal solutions. This paper uses simulation optimization by combining an LP/network flow formulation with infinitesimal perturbation analysis to examine the multi-location transshipment problem with positive replenishment lead times, and demonstrates the computation of the optimal base stock quantities through sample path optimization. From a methodological perspective, this paper deploys an elegant duality-based gradient computation method to improve computational efficiency. In test problems, our algorithm was also able to achieve better objective values than an existing algorithm.Transshipment;Infinitesimal Perturbation Analysis (IPA);Simulation Optimization

Hybrid Lateral Transshipments in a Multi-Location Inventory System

In managing networks of stock holding locations, two approaches to the pooling of inventory have been proposed. Reactive transshipm nts respond to stockouts at a location by moving inventory from elsewhere within the network, while proactive redistribution of stock seeks to minimise the chance of future shocks. This paper is the first to propose a hybrid approach in which transshipments are viewed as an opportunity for stock redistribution. We adopt a quasi-myopic approach to the development of a strongly performing hybrid transshipment policy. Numerical studies which utilise dynamic programming and simulation testify to the benefits of using transshipments proactively. In comparison to a purely reactive approach to transshipment, service levels are improved while a reduction in safety stock levels is achieved. The aggregate costs incurred in managing the system are significantly reduced, especially so for large networks facing high levels of demand.

Mathematical programming for single- and multi-location non-stationary inventory control

Stochastic inventory control investigates strategies for managing and regulating inventories under various constraints and conditions to deal with uncertainty in demand. This is a significant field with rich academic literature which has broad practical applications in controlling and enhancing the performance of inventory systems. This thesis focuses on non-stationary stochastic inventory control and the computation of near-optimal inventory policies for single- and two-echelon inventory systems. We investigate the structure of optimal policies and develop effective mathematical programming heuristics for computing near-optimal policy parameters. This thesis makes three contributions to stochastic inventory control. The first contribution concerns lot-sizing problems controlled under a staticdynamic uncertainty strategy. From a theoretical standpoint, I demonstrate the optimality of the non-stationary (s,Q) form for the single-item single-stocking location non-stationary stochastic lot-sizing problem in a static-dynamic setting; from a practical standpoint, I present a stochastic dynamic programming approach to determine optimal (s,Q)-type policy parameters, and I introduce mixed integer non-linear programming heuristics that leverage piecewise linear approximation of the cost function. The numerical study demonstrates that the proposed solution method efficiently computes near-optimal parameters for a broad class of problem instances. The second contribution is to develop computationally efficient approaches for computing near-optimal policy parameters for the single-item single-stocking location non-stationary stochastic lot-sizing problem under the static-dynamic uncertainty strategy. I develop an efficient dynamic programming approach that, starting from a relaxed shortest-path formulation, leverages a state space augmentation procedure to resolve infeasibility with respect to the original problem. Unlike other existing approaches, which address a service-level-oriented formulation, this method is developed under a penalty cost scheme. The approach can find a near-optimal solution to any instance of relevant size in negligible time by implementing simple numerical integrations. This third contribution addresses the optimisation of the lateral transshipment amongst various locations in the same echelon from an inventory system. Under a proactive transshipment setting, I introduce a hybrid inventory policy for twolocation settings to re-distribute the stock throughout the system. The policy parameters can be determined using a rolling-horizon technique based on a twostage dynamic programming formulation and a mixed integer linear programme. The numerical analysis shows that the two-stage formulation can well approximate the optimal policy obtained via stochastic dynamic programming and that the rolling-horizon heuristic leads to tight optimality gaps

A multimodal network flow problem with product quality preservation, transshipment, and asset management

In this paper, we present an optimization model for a transportation planning problem with multiple transportation modes, highly perishable products, demand and supply dynamics, and management of the reusable transport units (RTIs). Such a problem arises in the European horticultural chain, for example. As a result of geographic dispersion of production and market, a reliable transportation solutions ensures long-term success in the European market. The model is an extension to the network ow problem. We integrate dynamic allocation, ow, and repositioning of the RTIs in order to nd the trade-o between quality requirements and operational considerations and costs. We also present detailed computational results and analysis