“A Transshipment Problem at a Fast-Fashion Retailer”
by Abdullah Daşçı
Sabancı University
Abstract
Here, we present a transshipment problem for a large apparel retailer. The problem is inspired from the logistics operations of a very large fast fashion retailer in Turkey, LC Waikiki, with over 450 retail branches and thousands of products. The purpose of the transshipment is to rebalance stocks across the retail network to better match supply with demand. We formulate the problem as a mixed integer program. Due to the size of the formulation and complicating operational constraints, commercial optimizers cannot even solve small scale instances with reasonable optimality gaps. In response, we have developed a Lagrangian relaxation with a primal-dual approach to find upper bounds and a simulated annealing based metaheuristic to find promising solutions, both of which have proven to be quite effective. We have also conducted a set of numerical experiments to uncover implications of various operational practices of LC Waikiki on its system’s performance and important managerial insights.
Abdullah Dasci is an Associate Professor of Operations Management at the Sabanci Business School of Sabanci University. He obtained B.Sc. and M.S. degrees in Industrial Engineering from Bilkent University and Ph.D. in Management from McGill University. Prior to Sabanci, he taught at York University, University of North Carolina at Charlotte, and University of Alberta. His research interests include location theory and supply chain management. His work has appeared in leading management science journals such as Operations Research, Production and Operations Management, IIE Transactions, and European Journal of Operational Research.
