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Multiechelon inventory systems with lateral supply

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  • Craig C. Sherbrooke

Abstract

We develop approximations to estimate the expected backorders in a multiechelon system in which lateral supply actions between bases are allowed when a backorder occurs. These approximations are easy to compute, and the average absolute error over a wide range of parameter values is less than 4% when items are depot repairable, even when bases are dissimilar. With lateral supply, backorder reductions of 30‐50% are not uncommon, and a 72% reduction was observed in two cases. Lateral supply becomes more important with low demand rates. A similar approach was unsuccessful for base‐repairable items. However, lateral supply has a beneficial effect only when the lateral supply time is very short, 1/4 or less of the average base repair time. Even in such cases lateral supply is unlikely to be important in an actual application, because base management can expedite repair of critical items.

Suggested Citation

  • Craig C. Sherbrooke, 1992. "Multiechelon inventory systems with lateral supply," Naval Research Logistics (NRL), John Wiley & Sons, vol. 39(1), pages 29-40, February.
    • Handle: RePEc:wly:navres:v:39:y:1992:i:1:p:29-40
    DOI: 10.1002/1520-6750(199202)39:13.0.CO;2-L
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    References listed on IDEAS

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    1. Sven Axsäter, 1990. "Modelling Emergency Lateral Transshipments in Inventory Systems," Management Science, INFORMS, vol. 36(11), pages 1329-1338, November.
    2. Hau L. Lee, 1987. "A Multi-Echelon Inventory Model for Repairable Items with Emergency Lateral Transshipments," Management Science, INFORMS, vol. 33(10), pages 1302-1316, October.
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    Cited by:

    1. Jian Yang & Zhaoqiong Qin, 2007. "Capacitated Production Control with Virtual Lateral Transshipments," Operations Research, INFORMS, vol. 55(6), pages 1104-1119, December.
    2. van Wijk, A.C.C. & Adan, I.J.B.F. & van Houtum, G.J., 2019. "Optimal lateral transshipment policies for a two location inventory problem with multiple demand classes," European Journal of Operational Research, Elsevier, vol. 272(2), pages 481-495.
    3. Dhahri, Akrem & Gharbi, Ali & Ouhimmou, Mustapha, 2022. "Integrated production-transshipment control policy for a two-location unreliable manufacturing system," International Journal of Production Economics, Elsevier, vol. 247(C).

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