Analysis of Lateral Transshipments in Inventory Systems

Abstract: This thesis is based on two scientific papers. In these papers we study how one can approximate the inventory level of probabilities and the transshipment rates for inventory systems that apply lateral transshipment policies. Both papers consider a single-echelon inventory system consisting of a number of parallel installations, which all face Poisson demand. Normally, the installations replenish their stock from an outside supplier and the replenishment policy is an order-up-tl S policy with continuous review. Two different types of lateral transshipments are considered and they can be described as follows: - A lateral transshipment is triggered by a customer demand that can not be met directly. - An installation delivers incoming outstanding orders as lateral transshipments to other installations with backorders. In Paper 1 we consider the first type, and in Paper 2 we consider both types at the same time. When lateral transshipments are allowed it is assumed that all installations can use information about all other installations in the system.