The “Lateral Transshipment” is a Cooperative Tool for Optimizing the Profitability of a Distribution System

Abstract

In this chapter, we discuss a network consisting of a distribution center (or central depot) and two retailers who serve customers. D1 andD2 represent, respectively, the demands of retailer 1 and 2. We assume that the demandDi (i = 1, 2) at retailer i follows a normal distribution with mean μi and standard deviationσi (known). This analysis makes it possible to assess the effect of emergency transshipment both at the level of the Average Global Profit and of the Average Global Desservice Rate. In this chapter, we consider a centralized one-echelon supply chain with two-retailers selling products and facing stochastic demand.