Multiobjective Analysis of the Multi-Location Newsvendor and Transshipment Models

Abstract

Unlike the Newsvendor model, a system based on lateral transshipments allows the unsold inventories to be moved from locations with surplus inventory to fulfill more unmet demands at stocked out locations. Both models were thoroughly studied and researches were usually confined to cost minimization or profit maximization. In this paper, the authors proposed a more realistic multiobjective study of both multi-location Transshipment and Newsvendor inventory models. The aggregate cost, the fill rate, and the shared inventory quantity are formulated as conflicting objectives and solved using two reference multiobjective evolutionary algorithms (SPEA2 and NSGA-II). The proposed models take into account the presence of storage capacity constraints. The obtained Pareto fronts revealed interesting information. When transshipments are allowed, both low aggregate cost and high fill rate levels are ensured. The required shared inventory may have an important variability. The considered objective functions are conflicting and very sensitive to local storage capacities.