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Internet book retailing and supply chain management: an analytical study of inventory location speculation and postponement

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  • Bailey, Joseph P.
  • Rabinovich, Elliot

Abstract

Internet retailing models support supply chains where consumer order locations are decoupled from inventory locations. In this setting, retailers dynamically consider inventory location speculation and postponement to fulfill their orders. Particularly, retailers can manage inventory to fulfill orders through two opposing strategies: in-stock inventory and drop-shipping. This paper extends the supply chain management literature by modeling Internet retailers' decisions to balance their offerings between these two strategies. The results show how retailers depend more on both of these strategies as their market share and product popularity increase. Thus, both inventory management strategies may be considered simultaneously to better manage Internet retailers' inventory.

Suggested Citation

  • Bailey, Joseph P. & Rabinovich, Elliot, 2005. "Internet book retailing and supply chain management: an analytical study of inventory location speculation and postponement," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 41(3), pages 159-177, May.
    • Handle: RePEc:eee:transe:v:41:y:2005:i:3:p:159-177
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    Citations

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    Cited by:

    1. Mofidi, Seyed Shahab & Pazour, Jennifer A. & Roy, Debjit, 2018. "Proactive vs. reactive order-fulfillment resource allocation for sea-based logistics," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 114(C), pages 66-84.
    2. Yao, Dong-Qing & Kurata, Hisashi & Mukhopadhyay, Samar K., 2008. "Incentives to reliable order fulfillment for an Internet drop-shipping supply chain," International Journal of Production Economics, Elsevier, vol. 113(1), pages 324-334, May.
    3. Agatz, Niels A.H. & Fleischmann, Moritz & van Nunen, Jo A.E.E., 2008. "E-fulfillment and multi-channel distribution - A review," European Journal of Operational Research, Elsevier, vol. 187(2), pages 339-356, June.
    4. Kim, Nayeon & Montreuil, Benoit & Klibi, Walid, 2022. "Inventory availability commitment under uncertainty in a dropshipping supply chain," European Journal of Operational Research, Elsevier, vol. 302(3), pages 1155-1174.
    5. Changkyu Park, 2017. "A Partial Backordering Inventory Model with a Drop-Shipping Option Under Purchase Dependence," Asia-Pacific Journal of Operational Research (APJOR), World Scientific Publishing Co. Pte. Ltd., vol. 34(04), pages 1-20, August.
    6. Salehi Sadghiani, N. & Torabi, S.A. & Sahebjamnia, N., 2015. "Retail supply chain network design under operational and disruption risks," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 75(C), pages 95-114.
    7. Janjevic, Milena & Winkenbach, Matthias, 2020. "Characterizing urban last-mile distribution strategies in mature and emerging e-commerce markets," Transportation Research Part A: Policy and Practice, Elsevier, vol. 133(C), pages 164-196.
    8. Serel, Doğan A., 2015. "Production and pricing policies in dual sourcing supply chains," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 76(C), pages 1-12.
    9. Dai, B. & Chen, H.X. & Li, Y.A. & Zhang, Y.D. & Wang, X.Q. & Deng, Y.M., 2021. "Inventory replenishment planning of a distribution system with storage capacity constraints and multi-channel order fulfilment," Omega, Elsevier, vol. 102(C).
    10. Jason Acimovic & Stephen C. Graves, 2017. "Mitigating Spillover in Online Retailing via Replenishment," Manufacturing & Service Operations Management, INFORMS, vol. 19(3), pages 419-436, July.
    11. Jianming Yao, 2017. "Optimisation of one-stop delivery scheduling in online shopping based on the physical Internet," International Journal of Production Research, Taylor & Francis Journals, vol. 55(2), pages 358-376, January.
    12. Gupta, Varun & Perera, Sandun, 2021. "Managing surges in online demand using bandwidth throttling: An optimal strategy amid the COVID-19 pandemic," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 151(C).

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