Proceedings of International Social Sciences and Business Research Conference
4 - 5 December 2014, Hotel Himalaya, Kathmandu, Nepal, ISBN: 978-1-922069-65-8
A Complete Model for Cost-Optimized Lateral
Transshipment in a Multi-Supplier Environment
Dilupa Nakandala and Henry CW Lau
Logistics practitioners must continually improve inventory management processes
as they daily respond to the intense market competition that demands cost
efficiency enhancements. This study investigates managerial decision-making on
cost optimized lateral transshipment in a multi-supplier and multi-customer
environment where partial orders can be placed with multiple suppliers. Lateral
transshipments are when goods are sourced from the actors in the same echelon
of the supply chain network and they are more expensive than supplies from
regular supplies but instantaneous. We consider the presence of outstanding
supplier orders at the beginning of the scheduling period reflecting more realistic
situation in a periodic review inventory policy setting. Some suppliers are
expensive but provide guaranteed lead time for supply, while others are less costly
but their service is unlikely to be reliable. This study takes account of the trade-off
between reliability and cost into account, a cost function is derived to support
managerial decision-making on inventory management. Unlike the existing
traditional approaches that rely on complicated computation of probability, we
propose a fuzzy based approach that offers a more practical approach for industry.
This study contributes to research on cost optimization in complex inventory
system and the findings have implications for industry.
Track: Management: Supply Chain Management
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Dr Dilupa Nakandala, School of Business, University of Western Sydney, Australia Sydney, Locked
Bag 1797, Penrith, New South Wales, Australia 2751 D.Nakandala@uws.edu.au, Tel +61296859477
Dr. Henry CW Lau, School of Business, University of Western Sydney, Australia Sydney, Locked Bag
1797, Penrith, New South Wales, Australia 2751 H.Lau@uws.edu.au, Tel +61296859488