Research On Joint Replenishment And Transshipment For Three Locations

How to deal with the mismatch of demand and supply is an important issue in inventory management,with the fast development of globalization and the day-and-day growth of international trade,many firms face the following problem:one is the initial distribution decision at the beginning of the selling season;another one is the supply decision when demand arrives during the entire selling season.Many firms generally have several selling locations,while it's always intractable for multi-location problem.Here,we pay attention to three distribution stores.There are two decisions:the first one is the initial stocking decision at the beginning of the selling season;the second one is the supply decision when a demand arrives over the entire selling season.Modeling the problem with compound Poisson demand by a stochastic dynamic programming;investigating the upper bound and lower bound and furthermore the contribution of the two decisions,providing some heuristics and numerical study.The results indicate that the optimal transshipment/supply policy and the optimal initial stocking quantities can be obtained along with the structure properties of the value function;upper bound and lower bound derived by the hind-sight policy and static pol-icy respectively are both asymptotically optimal;contributions to the profit of the two decisions are of different order;the optimal initial order solutions almost coincide with the upper bound solutions;heuristics use upper bound solution as the initial stocking quantity along with a simple transshipment policy can be expected to achieve a near op-timal performance,which can be extended to multi-location problem,and in this way,the curse of dimensionality for multi-location problem can be avoided to some extent.