  In this paper, we propose a continuous time model for a multi-echelon
inventory system. Items in the inventory are deteriorating. Lateral
transshipment are allowed among the warehouses in the same echelon where
transshipment rate depends on the inventory level of the corresponding
warehouses. We give some sufficient conditions for the equilibrium points of
the system to be stable. By aggregating the warehouses in an echelon, a fast
procedure is developed for finding the equilibrium values of inventory level at
each warehouse.
