“Optimal Assortment Planning for Firms Using Transshipments”
by Nagihan Çömez Dolgan
İstanbul Şehir University
Transshipments may help firms to satisfy customer demand timely and at a lower cost then receiving emergency shipments from upper echelon supplier in case of stock unavailability. While the effects of considering transshipments along with inventory decisions are extensively investigated, transshipments may also affect more strategic level decisions such as assortment planning. In this study, our objective is to find the optimal assortments in a centralized system, where firms can utilize transshipments for the products they don’t keep. We use an exogenous demand model and consider the settings where an assortment capacity constraint at each firm is present or not. If a product is not carried by any of the firms, then it is considered that a customer can be willing to substitute his/her demand with another product, which can be either directly satisfied from the firms’s inventory or by transshipment. We shed light on optimal firm assortments when transshipments are utilized.