Lateral transhipments in supply chains (inventory control)

Most supply chain literature assumes that each echelon, e.g. the retailers, is supplied from an upstream echelon, e.g. the wholesaler. However, the lead time between echelons (wholesaler to retailers) can be large, in which case transhipments within an echelon (between retailers) offer an interesting emergency supply opportunity. Although lateral transhipments are common in many supply chains, they are ill-researched. Studies in the literature typically assume very simple transhipment policies that (1) do not take into account inventory reservation levels below which a retailer may not be willing to tranship and (2) tranship, if possible, exactly the amount needed to some retailer disregarding future stochastic requirements. The main aim would be to propose more sophisticated, though still practically useful, policies and determine their savings analytically for simple chains and, possibly, using simulation for more complex chains.

The subject of lateral transhipments is linked to that of Pooling and Inventory Allocation, which also provide opportunities for further research.

Further particulars from the supervisor, Professor Kevin Glazebrook.