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.
Highlights
Online sales have experienced a significant growth in recent years (Wu, 2015)
This study differs from that of Allgor et al (2003) and Xu (2005) in the following two aspects: first, this study considers the dual-channel supply chain with both online and offline demands while the references dealt with a single channel only, i.e., e-tailor supply chain; second, the proposed model in this study is based on a continuous review inventory policy (Q, R) and considers warehouse structure, operations, and capacities, while the references proposed a periodic review model (R, T)
This study examines the structure of the emerging dual-channel warehouse and presents an inventory control model for the dual-channel warehouse to determine the ordering quantities and reordering points for both offline and online channels
Summary
Online sales have experienced a significant growth in recent years (Wu, 2015). It is believed that this increase was because many firms upgraded their single-channel, offline sales business models to dual-channel clicks-andmortar models, which integrate both online and offline sales, during that time. It has been predicted that such growth in online sales will continue: web-influenced sales are expected to grow annually by 6% between 2015 and 2020 (Wu, 2015). Studies have shown that in 2008, 94% of the best financially performing firms were dual-channel sales firms (Kilcourse and Rowen, 2008). The emergence of dual-channel firms was mainly driven by the expansion in internet use and the advances in information and manufacturing technologies providing competitive advantage to the supply chain (Gunasekaran et al, 2017)
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