In inventory systems with several bases that support different geographical regions, it is quite common to allow emergency lateral transshipments between the bases. This may be advantageous if neighbouring bases are at shorter distances than the central depot or the external supplier. This paper provides a new technique for modelling such lateral transshipments in continuous review inventory systems with one-for-one replenishments and Poisson demand. We apply this technique to a two-echelon system with repairable items.
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Sven Axsäter (1990) studied this question.
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