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    A two-location inventory model with transshipment and local decision making

    Rudi, N. and Kapur, Sandeep and Pyke, D. (2001) A two-location inventory model with transshipment and local decision making. Management Science 47 (12), pp. 1668-1680. ISSN 0025-1909.

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    Abstract

    In situations where a seller has surplus stock and another seller is stocked out, it may be desirable to transfer surplus stock from the former to the latter. We examine how the possibility of such transshipments between two independent locations affects the optimal inventory orders at each location. If each location aims to maximize its own profits—we call this local decision making—their inventory choices will not, in general, maximize joint profits. We find transshipment prices which induce the locations to choose inventory levels consistent with joint-profit maximization.

    Metadata

    Item Type: Article
    School: School of Business, Economics & Informatics > Economics, Mathematics and Statistics
    Depositing User: Sarah Hall
    Date Deposited: 07 Jul 2020 07:24
    Last Modified: 07 Jul 2020 07:24
    URI: http://eprints.bbk.ac.uk/id/eprint/32467

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