A framework for inventory transhipment in integrated supply chains
by Faisal Aqlan; Sarah S. Lam; Sreekanth Ramakrishnan
International Journal of Supply Chain and Inventory Management (IJSCIM), Vol. 1, No. 2, 2016

Abstract: This study proposes a framework for interplant inventory transhipment to mitigate supply chain risks, especially supply and demand risks. If a manufacturing site in the supply chain does not have sufficient inventory to fulfil a customer order, the site can obtain parts from or offload the order to another site. The choice between the two options depends on several factors including cost of transportation, available time and capacity, customer requirements, etc. An algorithm is developed to prioritise the orders, identify the best shipping options, and estimate the shipping cost of parts. Furthermore, transportation delay and order cancellation risks are considered. The algorithm combines analytical models, knowledge-based rules, an analytic hierarchy process, and a risk assessment model. The framework was applied in a high-end server manufacturing supply chain with multiple production sites that share their capacity and inventory to mitigate supply and demand risks. Results from the case study show that the proposed framework can reduce the interplant transportation cost in addition to accounting for transportation risk and supporting the decision making process.

Online publication date: Fri, 06-May-2016

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