11/25 Tue, 11:00AM

Speaker: Enver YUCESAN, INSEAD, France
Title: The Multi-Location Transshipment Problem
We consider a supply chain, which consists of several retailers and one supplier.  The retailers, which possibly differ in their cost and demand parameters, may be coordinated through replenishment strategies and transshipments, that is, movement of a product among the locations at the same echelon level.  We show that an optimal policy for this system is for each retailer to follow an order-up-to S policy.  Furthermore, we show how the values of the order-up-to quantities can be calculated using a sample-path-based optimization procedure which is based on Infinitesimal Perturbation Analysis.  Given an order-up-to S policy, we show how to determine an optimal transshipment policy, using an LP/Network flow framework.  Such a combined numerical approach allows us to study complex and large systems.