The dynamics of emergency transhipment supply chains

Considers the dynamical effect of lateral emergency transhipments within a supply chain. It tests various different strategies for improving customer service via the MIT Beer Game. Four distinct strategies are considered. “Electronic point of sales (EPOS)”, where marketplace information is forwarded to all players throughout the supply chain; “Excel”, where the stock levels in all echelons are controlled by the factory; “Emergency transhipments”, where an express transportation route bypassing an echelon in the supply chain is permitted; “Eliminate”, where an echelon is removed from the supply chain. The Beer Game strategies are also studied via a simulation exercise. Results show that the Excel strategy is flawed, whereas the EPOS strategy has a strong impact on inventory cost, Emergency transhipments has a strong impact on customer service level and Eliminate results in less stock for an improved customer service level. Combinations of the three viable strategies are also tested. This paper concludes that the three strategies can be integrated to significantly improve supply chain performance.

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