IDEAS home Printed from https://ideas.repec.org/a/wsi/apjorx/v34y2017i04ns0217595917500166.html
   My bibliography  Save this article

A Partial Backordering Inventory Model with a Drop-Shipping Option Under Purchase Dependence

Author

Listed:
  • Changkyu Park

    (College of Business, University of Ulsan, Ulsan 680-749, Republic of Korea)

Abstract

Drop-shipping is a commonly adopted online-order fulfillment strategy in the Internet age. In this practice, online retailers leverage the fulfillment capabilities of suppliers to fulfill orders. On the other hand, purchase dependence is a frequent phenomenon and is characterized by the purchase of certain items together due to their unknown interior associations. Although this concept has been significantly examined in the marketing field (e.g., market basket analysis), it has largely remained unaddressed in operations management. This paper develops an (R,T) model to address an environment in which unmet demand orders are partially lost and partially backordered when purchase dependence exists. The partial backorders are fulfilled by a drop-shipping option. Through computational analyses, this paper demonstrates the effect of both drop-shipping on a partial backordering and purchase dependence. The results show that more profit can be realized by utilizing a drop-shipping option under purchase dependence.

Suggested Citation

  • 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.
    • Handle: RePEc:wsi:apjorx:v:34:y:2017:i:04:n:s0217595917500166
    DOI: 10.1142/S0217595917500166
    as

    Download full text from publisher

    File URL: http://www.worldscientific.com/doi/abs/10.1142/S0217595917500166
    Download Restriction: Access to full text is restricted to subscribers
    File URL: https://libkey.io/10.1142/S0217595917500166?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. Lee, Ching Chyi & Chu, Wai Hung Julius, 2005. "Who should control inventory in a supply chain?," European Journal of Operational Research, Elsevier, vol. 164(1), pages 158-172, July.
    2. Taylor Randall & Serguei Netessine & Nils Rudi, 2006. "An Empirical Examination of the Decision to Invest in Fulfillment Capabilities: A Study of Internet Retailers," Management Science, INFORMS, vol. 52(4), pages 567-580, April.
    3. Serguei Netessine & Nils Rudi, 2006. "Supply Chain Choice on the Internet," Management Science, INFORMS, vol. 52(6), pages 844-864, June.
    4. Jian Chen & Youhua Chen & Mahmut Parlar & Yongbo Xiao, 2011. "Optimal inventory and admission policies for drop-shipping retailers serving in-store and online customers," IISE Transactions, Taylor & Francis Journals, vol. 43(5), pages 332-347.
    5. 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.
    6. 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.
    7. Tsai, Chieh-Yuan & Tsai, Chi-Yang & Huang, Po-Wen, 2009. "An association clustering algorithm for can-order policies in the joint replenishment problem," International Journal of Production Economics, Elsevier, vol. 117(1), pages 30-41, January.
    8. Ayanso, Anteneh & Diaby, Moustapha & Nair, Suresh K., 2006. "Inventory rationing via drop-shipping in Internet retailing: A sensitivity analysis," European Journal of Operational Research, Elsevier, vol. 171(1), pages 135-152, May.
    9. 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.
    10. 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.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Barcs, Cristian & Pop, Izabela Luiza & Toader, Cezar & Ighian, Diana, 2022. "Drop-Shipping – A Business Model Without Holding Inventory: A Case Study of Online Store," MPRA Paper 118638, University Library of Munich, Germany.

    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. 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.
    2. T. M. Rofin & Biswajit Mahanty, 2021. "Fulfillment mode selection for Indian online sellers under free and flat rate shipping policies," Electronic Commerce Research, Springer, vol. 21(2), pages 263-296, June.
    3. Li, Guo & Zhang, Xuefeng & Liu, Mengqi, 2019. "E-tailer’s procurement strategies for drop-shipping: Simultaneous vs. sequential approach to two manufacturers," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 130(C), pages 108-127.
    4. Yu, Dennis Z. & Cheong, Taesu & Sun, Daewon, 2017. "Impact of supply chain power and drop-shipping on a manufacturer’s optimal distribution channel strategy," European Journal of Operational Research, Elsevier, vol. 259(2), pages 554-563.
    5. 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.
    6. 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.
    7. 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.
    8. Brahami Menaouer & Semaoune Khalissa & Mohammed El Amine Belayachi & Benslimane Amine, 2021. "The Role of Drop Shipping in E-Commerce: The Algerian Case," International Journal of E-Business Research (IJEBR), IGI Global, vol. 17(4), pages 1-19, October.
    9. 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.
    10. Mou, Shandong & Robb, David J. & DeHoratius, Nicole, 2018. "Retail store operations: Literature review and research directions," European Journal of Operational Research, Elsevier, vol. 265(2), pages 399-422.
    11. Guo Li & Hong Zheng & Mengqi Liu, 2020. "Reselling or drop shipping: Strategic analysis of E-commerce dual-channel structures," Electronic Commerce Research, Springer, vol. 20(3), pages 475-508, September.
    12. Sodero, Annibal C. & Namin, Aidin & Gauri, Dinesh K. & Bhaskaran, Sreekumar R., 2021. "The strategic drivers of drop-shipping and retail store sales for seasonal products," Journal of Retailing, Elsevier, vol. 97(4), pages 561-581.
    13. Santiago Gallino & Antonio Moreno, 2014. "Integration of Online and Offline Channels in Retail: The Impact of Sharing Reliable Inventory Availability Information," Management Science, INFORMS, vol. 60(6), pages 1434-1451, June.
    14. Becerril-Arreola, Rafael & Leng, Mingming & Parlar, Mahmut, 2013. "Online retailers’ promotional pricing, free-shipping threshold, and inventory decisions: A simulation-based analysis," European Journal of Operational Research, Elsevier, vol. 230(2), pages 272-283.
    15. Mohammad Heydari & Kin Keung Lai & Xiaohu Zhou, 2020. "Creating Sustainable Order Fulfillment Processes through Managing the Risk: Evidence from the Disposable Products Industry," Sustainability, MDPI, vol. 12(7), pages 1-32, April.
    16. Barcs, Cristian & Pop, Izabela Luiza & Toader, Cezar & Ighian, Diana, 2022. "Drop-Shipping – A Business Model Without Holding Inventory: A Case Study of Online Store," MPRA Paper 118638, University Library of Munich, Germany.
    17. He, Bo & Gupta, Varun & Mirchandani, Prakash, 2021. "Online selling through O2O platform or on your own? Strategic implications for local Brick-and-Mortar stores," Omega, Elsevier, vol. 103(C).
    18. 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.
    19. Leonard Calin ABRUDAN & Mirabela Constanta MATEI & Maria Madela ABRUDAN, 2018. "Running A Business Through A Sharing Responsibilities (And Profits) Strategy," Proceedings of the INTERNATIONAL MANAGEMENT CONFERENCE, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 12(1), pages 28-38, November.
    20. David R. Bell & Santiago Gallino & Antonio Moreno, 2018. "Offline Showrooms in Omnichannel Retail: Demand and Operational Benefits," Management Science, INFORMS, vol. 64(4), pages 1629-1651, April.

    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:wsi:apjorx:v:34:y:2017:i:04:n:s0217595917500166. 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: Tai Tone Lim (email available below). General contact details of provider: http://www.worldscinet.com/apjor/apjor.shtml .

    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.