MAJOR PROJECT RISK POOLING THROUGH LATERAL TRANSHIP MENT MULTI RETAILER SUPPLY CHAIN INVENTORY SYSTEM

Abstract

Lateral Transshipment is very an effective means of reducing total cost of the system, as well as improving the service level. The objective of this study is, to explore the implication of pooling on multi-Retailer supply chain inventory system, with one central ware house, with varying demand and varying lead time at each retail outlet. The product is either sold out or remains as a surplus. This surplus is transshipped to the other retailer having shortage. This way, both the holding costs and shortage costs of the total system are reduced and improvement in the service level. Here as an illustrative case with one central warehouse and three retail outlets have been considered. The demand and leadtime are randomly generated. The study is for perishable goods such as fruits and vegetables. This work demonstrates the benefits of lateral transshipment in terms of reduced total system cost and improve in customer service level or overcoming the uncertainty of demand and lead-time. This study also shows that risk pooling through lateral transshipment is effective, when unit lateral transshipment cost is low. One more conclusion we can drive from this study is that all members participating in pooling should be located near to each other.