Emergency transshipment in decentralized dealer Networks: When to send and accept transshipment requests

Hui Zhao, Vinayak Deshpande, Jennifer K. Ryan

Research output: Contribution to journalArticlepeer-review

41 Scopus citations

Abstract

While there has been significant previous literature on inventory transshipment, most research has focused on the dealers' demand filling decision (when to fill transshipment requests from other dealers), ignoring the requesting decision (when to send transshipment requests to other dealers). In this paper we develop optimal inventory transshipment policies that incorporate both types of decisions. We consider a decentralized system in which the dealers are independent of the manufacturer and of each other. We first study a network consisting of a very large number of dealers. We prove that the optimal inventory and transshipment decisions for an individual dealer are controlled by threshold rationing and requesting levels. Then, in order to study the impact of transshipment among independent dealers in a smaller dealer network, we consider a decentralized two-dealer network and use a game theoretic approach to characterize the equilibrium inventory strategies of the individual dealers. An extensive numerical study highlights the impact of the requesting decision on the dealers' equilibrium behavior in a decentralized setting.

Original languageEnglish (US)
Pages (from-to)547-567
Number of pages21
JournalNaval Research Logistics
Volume53
Issue number6
DOIs
StatePublished - Sep 1 2006

All Science Journal Classification (ASJC) codes

  • Modeling and Simulation
  • Ocean Engineering
  • Management Science and Operations Research

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