A continuous time multi-echelon inventory model for deteriorating items with transshipment

TL;DR

This paper introduces a continuous-time multi-echelon inventory model accounting for item deterioration and transshipment, providing stability conditions and an efficient method to determine equilibrium inventory levels.

Contribution

It presents a novel continuous-time model for deteriorating items with transshipment in multi-echelon systems, including stability analysis and a quick equilibrium computation method.

Findings

Derived stability conditions for equilibrium points.

Developed a fast aggregation-based procedure for equilibrium levels.

Enhanced understanding of inventory dynamics with deterioration and transshipment.

Abstract

In this paper, we propose a continuous time model for a multi-echelon inventory system. Items in the inventory are deteriorating. Lateral transshipment are allowed among the warehouses in the same echelon where transshipment rate depends on the inventory level of the corresponding warehouses. We give some sufficient conditions for the equilibrium points of the system to be stable. By aggregating the warehouses in an echelon, a fast procedure is developed for finding the equilibrium values of inventory level at each warehouse.