IDEAS home Printed from https://ideas.repec.org/a/eee/transe/v112y2018icp84-106.html
   My bibliography  Save this article

Dual-channel warehouse and inventory management with stochastic demand

Author

Listed:
  • Alawneh, Fawzat
  • Zhang, Guoqing

Abstract

This study examines the inventory policy for the emerging dual-channel warehouse, which has a unique structure where the warehouse is divided into two areas: one for fulfilling online orders and the other for storing products and fulfilling offline orders. A multi-item inventory model was developed considering the warehouse capacity constraint, demand, and lead time uncertainty. Solution methods are provided for both uniform and normal distributions. Adopting the proposed inventory policy for a dual warehouse is cost effective and adds flexibility to the warehouse and supply chain. The study also offers managerial insights on some critical issues faced by companies operating in a dual-channel context.

Suggested Citation

  • Alawneh, Fawzat & Zhang, Guoqing, 2018. "Dual-channel warehouse and inventory management with stochastic demand," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 112(C), pages 84-106.
    • Handle: RePEc:eee:transe:v:112:y:2018:i:c:p:84-106
    DOI: 10.1016/j.tre.2017.12.012
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1366554517301631
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.tre.2017.12.012?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Zhang, Cheng & Tan, Gek-Woo & Robb, David J. & Zheng, Xin, 2006. "Sharing shipment quantity information in the supply chain," Omega, Elsevier, vol. 34(5), pages 427-438, October.
    2. Jayashankar M. Swaminathan & Sridhar R. Tayur, 2003. "Models for Supply Chains in E-Business," Management Science, INFORMS, vol. 49(10), pages 1387-1406, October.
    3. Yan, Bo & Wang, Tao & Liu, Yan-ping & Liu, Yang, 2016. "Decision analysis of retailer-dominated dual-channel supply chain considering cost misreporting," International Journal of Production Economics, Elsevier, vol. 178(C), pages 34-41.
    4. Yao, Dong-Qing & Yue, Xiaohang & Mukhopadhyay, Samar K. & Wang, Ziping, 2009. "Strategic inventory deployment for retail and e-tail stores," Omega, Elsevier, vol. 37(3), pages 646-658, June.
    5. Schneider, Frank & Klabjan, Diego, 2013. "Inventory control in multi-channel retail," European Journal of Operational Research, Elsevier, vol. 227(1), pages 101-111.
    6. Marc A. De Bodt & Stephen C. Graves, 1985. "Continuous-Review Policies for a Multi-Echelon Inventory Problem with Stochastic Demand," Management Science, INFORMS, vol. 31(10), pages 1286-1299, October.
    7. Yao, Dong-Qing & Yue, Xiaohang & Wang, Xiaoyin & Liu, John J., 2005. "The impact of information sharing on a returns policy with the addition of a direct channel," International Journal of Production Economics, Elsevier, vol. 97(2), pages 196-209, August.
    8. Hua, Zhongsheng & Li, Sijie, 2008. "Impacts of demand uncertainty on retailer's dominance and manufacturer-retailer supply chain cooperation," Omega, Elsevier, vol. 36(5), pages 697-714, October.
    9. Alptekinoglu, Aydin & Tang, Christopher S., 2005. "A model for analyzing multi-channel distribution systems," European Journal of Operational Research, Elsevier, vol. 163(3), pages 802-824, June.
    10. Takahashi, Katsuhiko & Aoi, Takahiko & Hirotani, Daisuke & Morikawa, Katsumi, 2011. "Inventory control in a two-echelon dual-channel supply chain with setup of production and delivery," International Journal of Production Economics, Elsevier, vol. 133(1), pages 403-415, September.
    11. Kevin Chiang, Wei-yu & Monahan, George E., 2005. "Managing inventories in a two-echelon dual-channel supply chain," European Journal of Operational Research, Elsevier, vol. 162(2), pages 325-341, April.
    12. Tingting Li & Xiaobo Zhao & Jinxing Xie, 2015. "Inventory management for dual sales channels with inventory-level-dependent demand," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 66(3), pages 488-499, March.
    13. Gunasekaran, Angappa & Subramanian, Nachiappan & Papadopoulos, Thanos, 2017. "Information technology for competitive advantage within logistics and supply chains: A review," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 99(C), pages 14-33.
    14. 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.
    15. Xiao, Tiaojun & (Junmin) Shi, Jim, 2016. "Pricing and supply priority in a dual-channel supply chain," European Journal of Operational Research, Elsevier, vol. 254(3), pages 813-823.
    16. Lin, Zhibing, 2016. "Price promotion with reference price effects in supply chain," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 85(C), pages 52-68.
    17. Abdul-Jalbar, Beatriz & Gutiérrez, Jose M. & Sicilia, Joaquín, 2006. "Single cycle policies for the one-warehouse N-retailer inventory/distribution system," Omega, Elsevier, vol. 34(2), pages 196-208, April.
    18. Ghalebsaz-Jeddi, Babak & Shultes, Bruce C. & Haji, Rasoul, 2004. "A multi-product continuous review inventory system with stochastic demand, backorders, and a budget constraint," European Journal of Operational Research, Elsevier, vol. 158(2), pages 456-469, October.
    19. Bichescu, Bogdan C. & Fry, Michael J., 2009. "A numerical analysis of supply chain performance under split decision rights," Omega, Elsevier, vol. 37(2), pages 358-379, April.
    20. Wang, Wei & Li, Gang & Cheng, T.C.E., 2016. "Channel selection in a supply chain with a multi-channel retailer: The role of channel operating costs," International Journal of Production Economics, Elsevier, vol. 173(C), pages 54-65.
    21. Lu, Qihui & Liu, Nan, 2015. "Effects of e-commerce channel entry in a two-echelon supply chain: A comparative analysis of single- and dual-channel distribution systems," International Journal of Production Economics, Elsevier, vol. 165(C), pages 100-111.
    22. Matsui, Kenji, 2016. "Asymmetric product distribution between symmetric manufacturers using dual-channel supply chains," European Journal of Operational Research, Elsevier, vol. 248(2), pages 646-657.
    23. Liu, Mengqi & Cao, Erbao & Salifou, Coulibaly Kigbajah, 2016. "Pricing strategies of a dual-channel supply chain with risk aversion," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 90(C), pages 108-120.
    24. Yao, Dong-Qing & Liu, John J., 2005. "Competitive pricing of mixed retail and e-tail distribution channels," Omega, Elsevier, vol. 33(3), pages 235-247, June.
    25. Khouja, Moutaz, 2003. "Optimizing inventory decisions in a multi-stage multi-customer supply chain," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 39(3), pages 193-208, May.
    26. Paul Zipkin, 1986. "Inventory Service-Level Measures: Convexity and Approximation," Management Science, INFORMS, vol. 32(8), pages 975-981, August.
    27. Matsui, Kenji, 2017. "When should a manufacturer set its direct price and wholesale price in dual-channel supply chains?," European Journal of Operational Research, Elsevier, vol. 258(2), pages 501-511.
    28. Zhang, Jie & Farris, Paul W. & Irvin, John W. & Kushwaha, Tarun & Steenburgh, Thomas J. & Weitz, Barton A., 2010. "Crafting Integrated Multichannel Retailing Strategies," Journal of Interactive Marketing, Elsevier, vol. 24(2), pages 168-180.
    29. Panda, S. & Modak, N.M. & Sana, S.S. & Basu, M., 2015. "Pricing and replenishment policies in dual-channel supply chain under continuous unit cost decrease," Applied Mathematics and Computation, Elsevier, vol. 256(C), pages 913-929.
    30. Geng, Qin & Mallik, Suman, 2007. "Inventory competition and allocation in a multi-channel distribution system," European Journal of Operational Research, Elsevier, vol. 182(2), pages 704-729, October.
    31. Li, Bo & Hou, Peng-Wen & Chen, Ping & Li, Qing-Hua, 2016. "Pricing strategy and coordination in a dual channel supply chain with a risk-averse retailer," International Journal of Production Economics, Elsevier, vol. 178(C), pages 154-168.
    32. Wanke, Peter F., 2008. "The uniform distribution as a first practical approach to new product inventory management," International Journal of Production Economics, Elsevier, vol. 114(2), pages 811-819, August.
    33. Chen, Bintong & Chen, Jing, 2017. "When to introduce an online channel, and offer money back guarantees and personalized pricing?," European Journal of Operational Research, Elsevier, vol. 257(2), pages 614-624.
    34. Khouja, Moutaz & Stylianou, Antonis C., 2009. "A (Q,R) inventory model with a drop-shipping option for e-business," Omega, Elsevier, vol. 37(4), pages 896-908, August.
    35. Das, Rubel & Hanaoka, Shinya, 2014. "Relief inventory modelling with stochastic lead-time and demand," European Journal of Operational Research, Elsevier, vol. 235(3), pages 616-623.
    36. Fuguo Zhao & Desheng Wu & Liang Liang & Alexandre Dolgui, 2016. "Lateral inventory transshipment problem in online-to-offline supply chain," International Journal of Production Research, Taylor & Francis Journals, vol. 54(7), pages 1951-1963, April.
    37. Lee, Wenyih, 2005. "A joint economic lot size model for raw material ordering, manufacturing setup, and finished goods delivering," Omega, Elsevier, vol. 33(2), pages 163-174, April.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ding, Qing & Dong, Ciwei & Pan, Zhicong, 2016. "A hierarchical pricing decision process on a dual-channel problem with one manufacturer and one retailer," International Journal of Production Economics, Elsevier, vol. 175(C), pages 197-212.
    2. Guoxuan Huang & Qing Ding & Ciwei Dong & Zhicong Pan, 2021. "Joint optimization of pricing and inventory control for dual-channel problem under stochastic demand," Annals of Operations Research, Springer, vol. 298(1), pages 307-337, March.
    3. Tahirov, Nail & Glock, Christoph H., 2022. "Manufacturer encroachment and channel conflicts: A systematic review of the literature," European Journal of Operational Research, Elsevier, vol. 302(2), pages 403-426.
    4. Yao, Dong-Qing & Yue, Xiaohang & Mukhopadhyay, Samar K. & Wang, Ziping, 2009. "Strategic inventory deployment for retail and e-tail stores," Omega, Elsevier, vol. 37(3), pages 646-658, June.
    5. Modak, Nikunja Mohan & Kelle, Peter, 2019. "Managing a dual-channel supply chain under price and delivery-time dependent stochastic demand," European Journal of Operational Research, Elsevier, vol. 272(1), pages 147-161.
    6. Yong He & Hongfu Huang & Dong Li, 2020. "Inventory and pricing decisions for a dual-channel supply chain with deteriorating products," Operational Research, Springer, vol. 20(3), pages 1461-1503, September.
    7. Rodríguez, Betzabé & Aydın, Göker, 2015. "Pricing and assortment decisions for a manufacturer selling through dual channels," European Journal of Operational Research, Elsevier, vol. 242(3), pages 901-909.
    8. Yan, Yingchen & Zhao, Ruiqing & Liu, Zhibing, 2018. "Strategic introduction of the marketplace channel under spillovers from online to offline sales," European Journal of Operational Research, Elsevier, vol. 267(1), pages 65-77.
    9. Chen Wei & Sobhan Asian & Gurdal Ertek & Zhi-Hua Hu, 2020. "Location-based pricing and channel selection in a supply chain: a case study from the food retail industry," Annals of Operations Research, Springer, vol. 291(1), pages 959-984, August.
    10. Zhang, Yumeng & Hezarkhani, Behzad, 2021. "Competition in dual-channel supply chains: The manufacturers' channel selection," European Journal of Operational Research, Elsevier, vol. 291(1), pages 244-262.
    11. Raza, Syed Asif & Govindaluri, Srikrishna Madhumohan, 2019. "Pricing strategies in a dual-channel green supply chain with cannibalization and risk aversion," Operations Research Perspectives, Elsevier, vol. 6(C).
    12. Saha, Kushal & Bhattacharya, Subir, 2021. "‘Buy online and pick up in-store’: Implications for the store inventory," European Journal of Operational Research, Elsevier, vol. 294(3), pages 906-921.
    13. Berling, Peter & Johansson, Lina & Marklund, Johan, 2023. "Controlling inventories in omni/multi-channel distribution systems with variable customer order-sizes," Omega, Elsevier, vol. 114(C).
    14. Li, Guo & Li, Lin & Sun, Jiasen, 2019. "Pricing and service effort strategy in a dual-channel supply chain with showrooming effect," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 126(C), pages 32-48.
    15. Kenji Matsui & Yushi Tsunoda, 2022. "Effectiveness of exclusive territories by competing manufacturers managing dual‐channel supply chains," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(4), pages 1015-1024, June.
    16. Lee, Hsiao-Hui & Chang, Tingkai & Jean, Kevin & Kuo, Chia-Wei, 2022. "Channel design and OEM growth in a multi-market setup," European Journal of Operational Research, Elsevier, vol. 296(3), pages 862-872.
    17. Chen, Jing & Zhang, Hui & Sun, Ying, 2012. "Implementing coordination contracts in a manufacturer Stackelberg dual-channel supply chain," Omega, Elsevier, vol. 40(5), pages 571-583.
    18. Shi, Siyu & Sun, Jingchun & Cheng, T.C.E., 2020. "Wholesale or drop-shipping: Contract choices of the online retailer and the manufacturer in a dual-channel supply chain," International Journal of Production Economics, Elsevier, vol. 226(C).
    19. Alexander Hübner & Andreas Holzapfel & Heinrich Kuhn, 2016. "Distribution systems in omni-channel retailing," Business Research, Springer;German Academic Association for Business Research, vol. 9(2), pages 255-296, August.
    20. Matsui, Kenji, 2020. "Optimal bargaining timing of a wholesale price for a manufacturer with a retailer in a dual-channel supply chain," European Journal of Operational Research, Elsevier, vol. 287(1), pages 225-236.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:transe:v:112:y:2018:i:c:p:84-106. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/600244/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.