Synchromodal replenishment under non-stationary demand: An illustrative case study

Abstract

Synchromodal replenishment aligns transport mode decisions with inventory replenishment needs. We present a case study considering the simultaneous use of road and rail transport to replenish a distribution center in Belgium from a supplier in Spain, aiming for a modal shift from road to sustainable rail transport. Product demand is non-stationary, meaning the demand distribution changes over time. Although the underlying demand distribution is not directly observable, demand observations provide partial information. We apply the synchromodal replenishment policy proposed in Yee et al. (2024) that combines a committed, stable rail order with flexible short-term orders on rail and road. The short-term orders are based on inventory levels and partial information about the non-stationary demand. The case study demonstrates the value of adding short-term flexibility to rail orders to induce a modal shift. Our analysis shows how the proposed policy improves the modal shift compared to a benchmark policy without flexible rail orders. The retailer can reduce the carbon footprint of its replenishments without compromising service levels or costs. We also show how offering the flexible rail option increases the rail operator’s revenues. These findings highlight the potential of synchromodal replenishment with flexible rail orders to facilitate a modal shift.