Coordinated inventory replenishment and outsourced transportation operations

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GÜRLER Ü., Alp O., Buyukkaramikli N. C.

TRANSPORTATION RESEARCH PART E-LOGISTICS AND TRANSPORTATION REVIEW, vol.70, pp.400-415, 2014 (SCI-Expanded) identifier identifier

  • Publication Type: Article / Article
  • Volume: 70
  • Publication Date: 2014
  • Doi Number: 10.1016/j.tre.2014.08.004
  • Journal Name: TRANSPORTATION RESEARCH PART E-LOGISTICS AND TRANSPORTATION REVIEW
  • Journal Indexes: Science Citation Index Expanded (SCI-EXPANDED), Social Sciences Citation Index (SSCI), Scopus
  • Page Numbers: pp.400-415
  • Keywords: Third party logistics, Inventory, Transportation, Coordinated logistics, INTEGRATED INVENTORY, LOGISTICS, STRATEGIES, POLICIES, IMPACT, TIME
  • TED University Affiliated: Yes

Abstract

We consider a one-warehouse N retailers supply chain with stochastic demand. Inventory is managed in-house whereas transportation is outsourced to a 3PL provider. We develop analytical expressions for the operating characteristics under both periodic and continuous joint replenishment policies. We identify the settings where a periodic review policy is comparable to a continuous review one. In our numerical test-bed, the periodic policy performed best in larger supply chains operating with larger trucks. We also observed that if the excess utilization charge is less than 25%, outsourcing becomes beneficial even if outsourcing cost is 25% more than the in-house fleet costs. (C) 2014 Elsevier Ltd. All rights reserved.