Transshipments and Repositioning in the Standard Single-echelon Rental System

This chapter considers the standard single-echelon rental system applied to the setting of libraries. Two types of exchanges take place: transshipments from library to library to fulfill requests for items and repositioning operations to redistribute items between libraries. We determine optimal decisions for transshipments and repositioning, so that logistic costs are minimized. In current practice, libraries typically send transshipped items back to their original library after the rental period, i.e., there is fixed ownership. We consider a more general policy, in which it is possible to reposition items to any other library. By means of stochastic dynamic programming, we derive the optimal policy for small instances. For larger instances we present two heuristics: the cluster and the expected shortage reduction (ESR) heuristic. By comparing optimal policies and heuristics with policies currently applied in practice, we quantify the cost of having fixed ownership. Experiments indicate that fixed ownership can increase logistic costs by over 30%, hence we propose cost-efficient and easy-to-coordinate alternatives for stock repositioning. Reference: Van der Heide, G., & Roodbergen, K.J. (2013). Transshipment and rebalancing policies for library books. European Journal of Operational Research, 228, 447-456