An inventory positioning and location decision model based on centralized storage and lateral transshipment in multi-echelon supply chain

The two-echelon inventory system considered in this work is based on one single supplier, multiple distribution centers, and multiple retailers. In each echelon safety inventory is centralized stored in several centralized storage centers and lateral transshipment of safety stock is permitted between centralized storage site and non-centralized storage sites. The inventory positioning and location decision model developed focuses on safety stock cost, lateral transshipment cost, transportation cost, construction cost and shortage cost in multi-echelon supply chain. Numerical experiments show that: no matter whether in the echelon of distribution centers or retailers the factors which affect the selection from one single centralized storage center or multiple centralized storage centers are distance between distribution centers or retailers, unit transshipment cost and unit inventory carrying cost.