Service differentiation through selective lateral transshipments

Elisa Alvarez, Matthijs C. van der Heijden, Ingrid Vliegen, Willem H.M. Zijm

    Research output: Contribution to journalArticleAcademicpeer-review

    10 Citations (Scopus)

    Abstract

    We consider a multi-item spare parts problem with multiple warehouses and two customer classes, where lateral transshipments are used as a differentiation tool. Specifically, premium requests that cannot be met from stock at their preferred warehouse may be satisfied from stock at other warehouses (so-called lateral transshipments). We first derive approximations for the mean waiting time per class in a single-item model with selective lateral transshipments. Next, we embed our method in a multi-item model minimizing the holding costs and costs of lateral and emergency shipments from upstream locations in the network. Compared to the option of using only selective emergency shipments for differentiation, the addition of selective lateral transshipments can lead to significant further cost savings (14% on average).
    Original languageEnglish
    Pages (from-to)824-835
    JournalEuropean journal of operational research
    Volume237
    Issue number3
    DOIs
    Publication statusPublished - 2014

    Keywords

    • IR-91301
    • METIS-303939

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