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An inventory model with returns and lateral transshipments

Author

Listed:
  • W-K Ching

    (The University of Hong Kong)

  • W-O Yuen

    (The University of Hong Kong)

  • A W Loh

    (The Polytechnic University of Hong Kong, Hung Hom)

Abstract

In this paper, we propose a single-item inventory model with returns. The model allows lateral transshipment of returns from one inventory system to another. Each inventory system is under continuous review and an (r, Q) policy is employed as the inventory control. An approximated closed-form solution of the system steady-state probability distribution is derived when Q is large. The approximated inventory cost and replenishment cost can be written in terms of this distribution. We show that the rejection rate of returns is reduced significantly when transshipment of returns is allowed between the inventory systems.

Suggested Citation

  • W-K Ching & W-O Yuen & A W Loh, 2003. "An inventory model with returns and lateral transshipments," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 54(6), pages 636-641, June.
    • Handle: RePEc:pal:jorsoc:v:54:y:2003:i:6:d:10.1057_palgrave.jors.2601521
    DOI: 10.1057/palgrave.jors.2601521
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    References listed on IDEAS

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    1. Lawrence W. Robinson, 1990. "Optimal and Approximate Policies in Multiperiod, Multilocation Inventory Models with Transshipments," Operations Research, INFORMS, vol. 38(2), pages 278-295, April.
    2. Kiesmuller, Gudrun P. & van der Laan, Erwin A., 2001. "An inventory model with dependent product demands and returns," International Journal of Production Economics, Elsevier, vol. 72(1), pages 73-87, June.
    3. Ching, Wai Ki, 1997. "Markov-modulated Poisson processes for multi-location inventory problems," International Journal of Production Economics, Elsevier, vol. 53(2), pages 217-223, November.
    4. van der Laan, Erwin & Salomon, Marc, 1997. "Production planning and inventory control with remanufacturing and disposal," European Journal of Operational Research, Elsevier, vol. 102(2), pages 264-278, October.
    5. Cho, Danny I. & Parlar, Mahmut, 1991. "A survey of maintenance models for multi-unit systems," European Journal of Operational Research, Elsevier, vol. 51(1), pages 1-23, March.
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    Cited by:

    1. Van der Heide, G. & Roodbergen, K.J., 2013. "Transshipment and rebalancing policies for library books," European Journal of Operational Research, Elsevier, vol. 228(2), pages 447-456.
    2. Paterson, Colin & Kiesmüller, Gudrun & Teunter, Ruud & Glazebrook, Kevin, 2011. "Inventory models with lateral transshipments: A review," European Journal of Operational Research, Elsevier, vol. 210(2), pages 125-136, April.
    3. Tai, Allen H. & Ching, Wai-Ki, 2014. "Optimal inventory policy for a Markovian two-echelon system with returns and lateral transshipment," International Journal of Production Economics, Elsevier, vol. 151(C), pages 48-55.
    4. Van der Heide, G. & Roodbergen, K.J. & Van Foreest, N.D., 2021. "Cross docking for libraries with a depot," European Journal of Operational Research, Elsevier, vol. 290(2), pages 749-765.
    5. Tang, Shao-Long & Yan, Hong, 2010. "Pre-distribution vs. post-distribution for cross-docking with transshipments," Omega, Elsevier, vol. 38(3-4), pages 192-202, June.
    6. Dijkstra, Arjan S. & Van der Heide, Gerlach & Roodbergen, Kees Jan, 2019. "Transshipments of cross-channel returned products," International Journal of Production Economics, Elsevier, vol. 209(C), pages 70-77.
    7. Zümbül Atan & Lawrence V. Snyder & George R. Wilson, 2018. "Transshipment policies for systems with multiple retailers and two demand classes," OR Spectrum: Quantitative Approaches in Management, Springer;Gesellschaft für Operations Research e.V., vol. 40(1), pages 159-186, January.

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