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Published, Version of Record (VoR)CC BY V4.0, Open
Journal article
Application of Lateral Transshipment in Cost Reduction of Decentralized Systems
Sustainability (Basel, Switzerland), v 12(12), p5081
01 Jun 2020
Featured in Collection : UN Sustainable Development Goals @ Drexel
Abstract
COVID-19 has exposed the global supply chains to great vulnerability. In such extreme circumstances, product availability becomes a primary concern. This paper studies a basic inventory management strategy-lateral transshipment-under decentralized systems, which may play an important role in dealing with stockouts during unexpected crises. Lateral transshipments not only react quickly to stockout, but are also environmentally friendly due to the significant reduction of production and transportation pollution. This paper studies optimal lateral transshipment and replenishment decisions under a decentralized setting. We construct a multi-stage stochastic model that captures demand uncertainty and customer switching behavior. We demonstrate that, similar to the centralized setting, the optimal transshipment decision follows a double-threshold structure. The optimal replenishment quantities are determined under two pricing mechanisms-individual mechanism (IP) and negotiated mechanism (NP). Numerical examples are provided to demonstrate the impact of lateral transshipment on supply chain cost reduction.
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Details
- Title
- Application of Lateral Transshipment in Cost Reduction of Decentralized Systems
- Creators
- Yi Liao - Southwestern Univ Finance & Econ, Sch Business Adm, Chengdu 610074, Peoples R ChinaJun Li - Southwestern Univ Finance & Econ, Sch Business Adm, Chengdu 610074, Peoples R ChinaXinxin Hu - Univ Houston Downtown, Marilyn Davies Coll Business, Houston, TX 77002 USAYing Li - Texas A&M Univ, Mays Business Sch, College Stn, TX 77843 USAWenjing Shen - Drexel University
- Publication Details
- Sustainability (Basel, Switzerland), v 12(12), p5081
- Publisher
- Mdpi
- Number of pages
- 20
- Resource Type
- Journal article
- Language
- English
- Academic Unit
- Decision Sciences (and Management Information Systems)
- Web of Science ID
- WOS:000550333400001
- Scopus ID
- 2-s2.0-85086922116
- Other Identifier
- 991019167561704721
UN Sustainable Development Goals (SDGs)
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- Collaboration types
- Domestic collaboration
- International collaboration
- Web of Science research areas
- Environmental Sciences
- Environmental Studies
- Green & Sustainable Science & Technology