Strategic inventory deployment for retail and e-tail stores

In this paper, we study a supply chain comprising one manufacturer and one retailer. Customers can make purchases either from the retailer or directly from the manufacturer via an e-tail channel. From the manufacturer's perspective of managing the two channels, we study three different inventor...

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Bibliographic Details
Published in:Omega (Oxford) 2009-06, Vol.37 (3), p.646-658
Main Authors: Yao, Dong-Qing, Yue, Xiaohang, Mukhopadhyay, Samar K., Wang, Ziping
Format: Article
Language:English
Subjects:
3PL
Applied sciences
e-tail channel
Exact sciences and technology
Firm modelling
Inventory
Inventory control, production control. Distribution
Logistics
Operational research and scientific management
Operational research. Management science
Outsourcing
Supply chain
Supply chain Inventory 3PL e-tail channel Outsourcing
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Summary:In this paper, we study a supply chain comprising one manufacturer and one retailer. Customers can make purchases either from the retailer or directly from the manufacturer via an e-tail channel. From the manufacturer's perspective of managing the two channels, we study three different inventory strategies, namely centralized inventory strategy, a Stackelberg inventory strategy, and a strategy where the e-tail operation is outsourced to a third party logistics provider (3PL). For each strategy, we obtain the optimal inventory levels in retail and e-tail stores and the respective expected profits. We compare the performance of various strategies. Managerial insights are provided through analytical and numerical analyses to illustrate the applicability of different strategies.
ISSN:0305-0483
1873-5274
DOI:10.1016/j.omega.2008.04.001