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Controlling inventories in omni/multi-channel distribution systems with variable customer order-sizes

Berling, Peter LU ; Johansson, Lina LU and Marklund, Johan LU (2023) In Omega (United Kingdom) 114.
Abstract

The fast growth of e-commerce and omni/multi-channel retailing brings new challenges for efficient inventory management. One such challenge concerns service differentiation across channels when upstream central warehouses satisfy both direct customer demand and replenishment orders from downstream retailers. Motivated by industry collaboration, we address this issue by developing a combined stock method for control of one-warehouse-multiple-retailer inventory systems with direct customer demand at the central warehouse. The combined stock method, used for service differentiation at the central warehouse, may be described as a critical level policy. The computationally efficient heuristics we present are designed to deal with real-life... (More)

The fast growth of e-commerce and omni/multi-channel retailing brings new challenges for efficient inventory management. One such challenge concerns service differentiation across channels when upstream central warehouses satisfy both direct customer demand and replenishment orders from downstream retailers. Motivated by industry collaboration, we address this issue by developing a combined stock method for control of one-warehouse-multiple-retailer inventory systems with direct customer demand at the central warehouse. The combined stock method, used for service differentiation at the central warehouse, may be described as a critical level policy. The computationally efficient heuristics we present are designed to deal with real-life one warehouse multiple retailer inventory systems characterized by highly variable customer order-sizes, (R,Q) policies at all stock points, and fill rate constraints. A numerical study, including real data from two different companies, illustrates that the heuristics perform well; offering near optimal solutions close to target fill rates, with significant opportunities to reduce total inventory costs compared to existing methods.

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author
; and
organization
publishing date
type
Contribution to journal
publication status
published
subject
keywords
Inventory, Multi-channel, Multi-echelon, Service level, Stochastic
in
Omega (United Kingdom)
volume
114
article number
102745
publisher
Elsevier
external identifiers
  • scopus:85137305774
ISSN
0305-0483
DOI
10.1016/j.omega.2022.102745
language
English
LU publication?
yes
id
46adfe42-0a40-4a8b-b24c-4644aa6044f5
date added to LUP
2022-10-14 07:57:42
date last changed
2022-10-14 07:58:49
@article{46adfe42-0a40-4a8b-b24c-4644aa6044f5,
  abstract     = {{<p>The fast growth of e-commerce and omni/multi-channel retailing brings new challenges for efficient inventory management. One such challenge concerns service differentiation across channels when upstream central warehouses satisfy both direct customer demand and replenishment orders from downstream retailers. Motivated by industry collaboration, we address this issue by developing a combined stock method for control of one-warehouse-multiple-retailer inventory systems with direct customer demand at the central warehouse. The combined stock method, used for service differentiation at the central warehouse, may be described as a critical level policy. The computationally efficient heuristics we present are designed to deal with real-life one warehouse multiple retailer inventory systems characterized by highly variable customer order-sizes, (R,Q) policies at all stock points, and fill rate constraints. A numerical study, including real data from two different companies, illustrates that the heuristics perform well; offering near optimal solutions close to target fill rates, with significant opportunities to reduce total inventory costs compared to existing methods.</p>}},
  author       = {{Berling, Peter and Johansson, Lina and Marklund, Johan}},
  issn         = {{0305-0483}},
  keywords     = {{Inventory; Multi-channel; Multi-echelon; Service level; Stochastic}},
  language     = {{eng}},
  month        = {{01}},
  publisher    = {{Elsevier}},
  series       = {{Omega (United Kingdom)}},
  title        = {{Controlling inventories in omni/multi-channel distribution systems with variable customer order-sizes}},
  url          = {{http://dx.doi.org/10.1016/j.omega.2022.102745}},
  doi          = {{10.1016/j.omega.2022.102745}},
  volume       = {{114}},
  year         = {{2023}},
}