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A novel rewards-based protocol and decision-making technique for transshipment in supply chains

We propose a novel rewards based protocol and online decision-making technique to transshipment between stocking locations each supplied periodically to replenish their stocks. Our approach enables independent decision-making by the stocking locations while each of them can adopt replenishment strategies as they wish. The relevant trade-off in our context is that of a significant reduction in the shortage costs for a smaller investment in transport costs. We conduct a multi-period simulation study where in each period transshipment decisions are followed by demand occurrence followed by demand satisfaction.