Product Inventory Transshipment Management

This thesis deals with a multi-item,single period lateral transshipment model of a two location inventory system in which lateral transshipments or emergency supplies are used in response to stockouts.We assume that the stochastic customer demands have to be satisfied to 100%,that no salvage value for remaining units at the end of the period exists,and that variable as well as fixed transshipment costs are considered.In practice such a constellation can be found for example for hospitals or pharmacies,where a patient definitely needs a certain medicine during a period which has a limited durability.After a comprehensive literature review we developed a linear optimization model for an environment with two retailers for multiple items.The objective is to determine optimal transshipment and emergency supply decisions that maximize the centralized profit of the system.An extensive numerical study shows that the average profit for our chosen case can be increased by approximately 6% due to transshipments.We also show the enhancement of profit when moving from a no-transshipment policy to a transshipment policy.Finally,we summarize all findings and depict them in a synoptical table.