Inventory Control Models towards Physical Internet: Lateral Transshipment Policy Determination by Simulation

Inventory control policy is crucial in a supply chain management, since it affects the performance of whole supply chain significantly. Recent advances has changed the order profile towards more product variety with less volume and decreased response time (e.g. same day delivery, etc.). This issue has created more variability in orders throughout the supply chain. Hence, management of inventory became a critical subject in a supply chain to alter this variability and increase the performance of the supply chain. This paper investigates an (s, S) inventory control model using the benefits of the Physical Internet that provides lateral transshipment between the intermediate hub locations. As a result of this study, it is observed that the performance of a lateral transshipment policy strongly depends on the studied network design and its parameter values as well as how the transshipment policies are pre-defined.