Analysis of Optimal Batch Transshipment Policies between Two Retailers of Electronic Products

After investigating and analyzing the Zhongguancun electronic products market, this paper studies the optimal batch transshipment policies between two competing retailers by establishing a model. The model assumes that both retailers hold a certain quantity of initial inventories which are non-replenishable during the selling process, one of the retailers can only ask for transshipment from the other one if it has run out of its inventory, and share profit as agreed scale. In this process, both retails pursue expected profit maximization, they make the optimal batch transshipment policies based on the comprehensive consideration of transshipment profits, inventory costs and transshipment costs. The result shows that one of the retails will grant the request of transshipment only when its actual inventory level is higher than the key value. Moreover, the specialty of this model is that the retail who has run out of the inventory will consider whether to ask for transshipment based on profits.