Batch Ordering Policy of Spare Parts in Multi-location Inventory System with Unidirectional Lateral Transshipments

Management of multi-echelon with transshipments is an effective approach to improve support effectiveness. A common assumption in early papers is that transshipments are allowed between all locations. However, this configuration may not be the best choice in many fields. Focusing on the problem, a system where transshipments are allowed only in one direction is provided. Such policies may be of interest if the locations have very different shortage costs. The technique is solved in a simple and efficient heuristic algorithm, and the simulation shows that the model produces accurate estimation. Numerical studies show that unidirectional transshipments improve various system performance measures such as the fill rate, the average inventory on hand, and the average backorder level. The proposed method gives a good picture of how considered unidirectional lateral transshipments affect the inventory system, which has large significance for completing inventory theory and supplying decision assistance for a reasonable optimization project.