THE INFLUENCE OF INDIVIDUAL COST FACTORS ON THE USE OF EMERGENCY TRANSSHIPMENTS

Emergency transshipments represent one way in which logistics managers can reduce inventories while simultaneously maintaining customer serv ice levels. This paper examines the cost implications of these actions and offers a straightforward approach to analyzing their suitability. Simulation results indicate that the cost of a stockout is the primar y determinant in the transshipment decision, with higher stockout cost levels generally increasing the likelihood that transshipment usage w ill lead to lower overall cost. A meta-model is proposed as a practica l means of providing insight into when emergency transshipments should be employed. (C) 1998 Elsevier Science Ltd. All rights reserved.