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The value of virtual pooling in dual sales channel supply chains

  • Mahar, Stephen
  • Bretthauer, Kurt M.
  • Venkataramanan, M.A.
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    Recently the most significant growth in online retailing has been attributed to traditional offline retailers extending their brands online. Unfortunately, there is little research addressing the value of better information in retail/e-tail organizations. To fill this gap, this paper examines how investing in the continuous monitoring of online demands and inventory positions can provide economic benefit for companies that handle both in-store and online sales. Specifically, we develop and evaluate two dynamic assignment policies that incorporate real time information to specify which of a firm's e-fulfillment locations will handle each of its Internet sales. Computational results indicate that investing in dynamic assignment capability can reduce system cost (holding, backorder, and transportation) by as much as 8.2% over the optimal static policy. The percentage of sales occurring online plays a critical role in determining the magnitude of the benefit.

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    Article provided by Elsevier in its journal European Journal of Operational Research.

    Volume (Year): 192 (2009)
    Issue (Month): 2 (January)
    Pages: 561-575

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    Handle: RePEc:eee:ejores:v:192:y:2009:i:2:p:561-575
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    11. Bendoly, Elliot & Blocher, Doug & Bretthauer, Kurt M. & Venkataramanan, M.A., 2007. "Service and cost benefits through clicks-and-mortar integration: Implications for the centralization/decentralization debate," European Journal of Operational Research, Elsevier, vol. 180(1), pages 426-442, July.
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