A new approach to two-location joint inventory and transshipment control via L♮L♮-convexity

We provide a new approach to the analysis of the optimal joint inventory and transshipment control with uncertain capacities by employing the concept of L♮L♮-convexity. In this approach, we use variable transformation techniques and apply two recent results to establish the L♮L♮-concavity of the profit-to-go functions, which significantly simplifies the analysis in the existing literature. Some variations of the basic model can also be analyzed using our approach with minor modifications.