An inventory model with returns and lateral transshipments

W. K. Ching, W. O. Yuen, A. W. Loh

Research output: Contribution to journalArticlepeer-review

32 Citations (Scopus)


In this paper, we propose a single-item inventory model with returns. The model allows lateral transshipment of returns from one inventory system to another. Each inventory system is under continuous review and an (r, Q) policy is employed as the inventory control. An approximated closed-form solution of the system steady-state probability distribution is derived when Q is large. The approximated inventory cost and replenishment cost can be written in terms of this distribution. We show that the rejection rate of returns is reduced significantly when transshipment of returns is allowed between the inventory systems.

Original languageEnglish
Pages (from-to)636-641
Number of pages6
JournalJournal of the Operational Research Society
Issue number6
Publication statusPublished - Jun 2003


  • Inventory model
  • Lateral transshipment
  • Returns
  • Reverse logistics
  • Steady-state probability distribution


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