An integrated approach for the operations of distribution and lateral transshipment for seasonal products - A case study in household product industry

James T. Lin, Ming-Jong Yao*, Chen Hao Yang

*Corresponding author for this work

Research output: Contribution to conferencePaperpeer-review

Abstract

Household product industry often suffers in problems of higher operational costs and/or lost sales from selling seasonal products since managers in different divisions/stages of the supply chain make their decisions independently. Therefore, we are motivated to propose an approach that integrated the operations in the three stages of supply chain for the management of seasonal products. The goal of this study is to minimize the total costs incurred for the seasonal product in the whole selling period. In the first stage, we employ a newsvendor model to determine the optimal one-time-only order quantities of the seasonal products. Then, we utilize a clustering analysis in the second stage to categorize seasonal products into groups, and established an optimal replenishment policy for the products in the same group. Finally, the third stage starts when the warehouse runs out of its inventory. We formulate a mathematical model to determine the optimal transshipment quantities among all of the retailers to minimize the expected total costs incurred for the rest of the selling period. Taking a household product company in Taiwan as our case study, we demonstrate the implementation of the proposed (integrated) approach. Based on the real-world data of 17 seasonal products, we show that our integrated approach significantly outperforms the company's current approaches. Therefore, our integrated approach may serve as an effective decision support tool for the distribution and lateral transshipment of seasonal products in household product industry.

Original languageEnglish
Pages2242-2253
Number of pages12
StatePublished - 1 Dec 2006
Event36th International Conference on Computers and Industrial Engineering, ICC and IE 2006 - Taipei, Taiwan
Duration: 20 Jun 200623 Jun 2006

Conference

Conference36th International Conference on Computers and Industrial Engineering, ICC and IE 2006
CountryTaiwan
CityTaipei
Period20/06/0623/06/06

Keywords

  • Distribution
  • Lateral transshipment
  • Mathematical model
  • Seasonal products
  • Supply chain

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