Decentralized Decision on Emergency Transshipment

Utilizing emergency transshipment between two retailers at the end of the season of sales to meet special customer demand can be an effective mean for companies to reduce sale lost cost and/or holding on cost. This paper provides a decision rule for how much (if any) to transshipment, with the condition that the two retailers involved have profit objects and decision made respectively. While the model explicitly of fixed and variable transshipment costs for each of them, it is possible to decide the amount of proposition cost helping to bring about the emergency transshipment.