Dynamic interactive control of inventory in a dual-channel supply chain under stochastic demand: Modelling and empirical studies

Demand uncertainties and delivery delays are the fundamental causes of poor inventory control, especially in a dual-channel supply chain. Considering the impact of stochastic demand on the dual-channel inventory. this study explores the dynamic interactions of online–offline purchase–sale–stock systems under the decentralised, centralised, and cross-replenishment inventory controls. Hence, this study constructs a dynamic inventory model with delivery delays, based on the feedback and proportional–integral–derivative control, to optimise the influences between the replenishment cycles and online–offline channels’ interactions. The results show that, when the channels follow different sales strategies and the warehouses are proximally located, the cross-replenishment inventory strategy reduces the residual inventory. When the channels follow the same sales strategies, the centralised inventory control reduces the residual inventory. These findings demonstrate that the dynamic interactive inventory model can contribute towards optimising inventory operations. This study presents substantial insights for improving the overall performances of the dual-channel supply chain from the perspectives of dynamic and interactive inventory control, warehouse and retail network optimisation, and resource allocation.