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Multi-echelon fulfillment warehouse rent and production allocation for online direct selling

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  • Zhanwei Tian

    (Northeast Agricultural University)

  • Guoqing Zhang

    (University of Windsor)

Abstract

We consider the joint decision problem of renting three types of warehouses and allocating products among the warehouses in an E-commerce supply network, which are supplier, regional, and local warehouses. The research is motivated by a real-world emerging problem in an open warehouse platform (OWP) environment. We focus on the distinct characteristics of a network using an OWP and its underlying cost drivers and propose a nonlinear mixed integer programming model that reflects the interdependencies among inbound transportation, warehousing, delivery, and return, as well as time-sensitive demand. Our nonlinear model with multiple products is converted into a linear form so that it can be solved by a solver. The application of the model to a real-world case of a leading E-commerce company in China demonstrates a significant potential to increase profit, and our sensitivity analysis provides insights for operations managers into warehouse rent and inventory decisions.

Suggested Citation

  • Zhanwei Tian & Guoqing Zhang, 2021. "Multi-echelon fulfillment warehouse rent and production allocation for online direct selling," Annals of Operations Research, Springer, vol. 304(1), pages 427-451, September.
    • Handle: RePEc:spr:annopr:v:304:y:2021:i:1:d:10.1007_s10479-021-04202-0
    DOI: 10.1007/s10479-021-04202-0
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