Inventory strategy of fresh products for omni-channel supply chains

Abstract

By constructing the consumers’ utility function, this article calculates the optimal order quantity and optimal expected profit of a fresh retailer under the centralized and decentralized inventory strategy in an omni-channel supply chain. In addition, the impact of consumers’ channel preference, consumers’ demand transfer behavior, and the "buy-online-pickup-in-store" (BOPS) service on retailers’ inventory strategy are analyzed. The results show that opening a BOPS service is not always beneficial to retailers. However, it is always beneficial for retailers to eliminate the differences between channels. Under the centralized inventory strategy, the optimal order quantity and expected profit are only affected by the freshness-keeping cost, while under the decentralized inventory strategy, they are affected by various consumer behaviors. A reasonable inventory management strategy should be adopted according to the product type, inventory cost, consumer preferences, and order quantity.