Shipping Policy Research Articles

Restoring the buyer–seller relationship through online return shipping: The role of return shipping method and return shipping fee

Relationships with consumers are critical to the success of online sellers. Online returns can detrimentally influence buyer–seller relationships and, thus, online sellers should carefully approach online returns to restore their relationship with consumers. Returns due to consumer satisfaction-related reasons are a significant and inevitable part of e-commerce. This article focuses on how online sellers deal with the method and the fee aspects of their return shipping policy to improve buyer–seller relationships. We also studied the effects of return shipping policies on several pivotal consumer perceptions and repurchase intentions. A two-factor (integrated return shipping vs. separated return shipping; free return shipping vs. fee return shipping), between-subject experiment was conducted. This research revealed that both using an integrated return shipping method and offering free return shipping can lead to a better buyer–seller relationship and improve other consumer responses. No interaction effect was found between the two factors.

Developing a Comprehensive Shipment Policy through Modified EPQ Model Considering Process Imperfections, Transportation Cost, and Backorders

Background: Determining the optimum shipment quantity in a traditional production system is a competitive business dimension, and developing a reliable shipment policy is decisive for long-term objectives. Currently, significant research in this domain has mainly focused on the optimum shipment lot sizing in a perfect production system without considering the imperfections in the production processes and logistics. It has been well established that the real production inventory system acts as an imperfection in the overall production management loop. Methods: This research deals with designing a new shipment policy considering the imperfections in the production processes and undertaking some influential factors, such as the transportation cost, the actual production inventory, defective items, and backorders. Results: In the developed mathematical framework, the lot-sizing problems, imperfections in the production processes, retailers, and distributors are considered with equal-sized shipment policy to attain pragmatic and real-time results. Conclusions: The developed framework considers an all-unit-discount transportation cost structure. The numerical computations, as well as sensitivity analysis, are performed to point out the specifications and validation of the proposed model.

Inventory management with advance demand information and flexible shipment consolidation

In this paper, we study a stochastic single-item, single-stage inventory system, in which orders from several production facilities are placed at one warehouse. An (R, Q) policy is applied to control the inventory at the warehouse, and orders arrive according to a Poisson process and include a due date such that some information about future demand is available. This advance demand information (ADI) can be used to adapt a time-based shipment consolidation policy applied to replenish stock at the production facilities. We develop a model to incorporate flexible deliveries, indicating that orders can be shipped before their due date if sufficient reserved transportation capacity is available. We derive analytical, approximate expressions for the expected inventory and shipment costs and therefore enable the evaluation of different inventory and shipment policies including outbound transportation capacities. We additionally show how to compute the optimal policy parameters and conduct a detailed numerical study. Our computational experiments indicate that our approximation works extremely well, with an average total cost deviation of 0.20%, and finds optimal policy parameters in more than 90% of our instances. In line with existing research, we can show that ADI leads to large cost reductions. However, the main cause of the cost reduction is the flexible delivery option. To be able to completely utilize this option, even larger safety stocks are obtained compared to systems without ADI, but savings due to a more efficient transportation policy far exceed the cost increase due to higher safety stocks.

Free shipping policy for imported cross-border e-commerce platforms

Free shipping policy for imported cross-border e-commerce platforms

Alternative shipment policies compared for an international supply chain model with stochastic exchange rate, carbon emission and imperfect quality items

Researchers have recently developed a model for international supply chains for transferring lots in equal-sized batches, taking environmental concerns into account. This scheme incorporated stochastic behaviour of the exchange rate between the vendor's and buyer's currencies as part of the process for making optimal decisions on the supply chain. They demonstrated that their model leads to a decrease in the total cost. However, a lower total cost can be achieved by synchronizing the integrated production flow through generalization of the batch transfer method used to deliver the lot. Furthermore, there seems to be a better fit from a new data set for comparing two currencies. With these developments in mind, we suggest an alternative model, considering transferring batches of unequal sizes, transfer costs that may be fixed or variable, and with an eye on environmental issues. Numerical experiments are presented to demonstrate the proposed model and solution method. These numerical experiments show the value of this integrated approach in the combined determination of optimal policies for production and shipment. Suggestions for further research are given in the conclusion.

Optimal inventory replenishment and shipment policies in a three-echelon supply chain for growing items with expiration dates

Optimal inventory replenishment and shipment policies in a three-echelon supply chain for growing items with expiration dates

Quantity-based emergency shipment policies

Either structurally or in an ad hoc manner, emergency shipments are widely utilized for preventing the potentially negative impacts of stock-outs. In addition to having policies for their regular orders, companies need to decide when and for how many units to place emergency orders. In this article, we consider the periodic-review problem of a retailer who uses a quantity-based emergency shipment policy. Under this policy an emergency order is triggered if the inventory level within the review period falls below a certain level. We consider the base-stock policy for the regular replenishment orders. The goal is to determine the optimal base-stock level, the optimal period length as well as the optimal size and threshold value of emergency orders such that the total expected cost rate is minimized. We use renewal reward theory to derive the expressions of operating characteristics. The expected cost rate’s properties are analyzed to develop an optimization algorithm for finding the optimal policy parameters. We compare our policy with the time-based and hybrid emergency shipment policies and conclude that the quantity-based policy can bring substantial benefits compared to other policies.

A three-layer supply chain integrated production-inventory model with idle cost and batch shipment policy

The paper describes an integrated/centralised supply chain model consisting of one supplier, one manufacturer and one retailer within a finite time horizon. The manufacturer produces, at a finite rate, in each lot. The lot production rate in a batch increases with a rate λ in successive batch and the produced items are supplied to the retailer. The objective of the proposed model is to optimize the average total profit under the consideration of the proportional increase in the size of successive shipments within a batch production run and the production time of the supplier. The corresponding average profits of the supplier, the manufacturer and the retailer and the average total profit of integrated model are obtained. The results obtained in the numerical examples clearly establish that it is always beneficial in terms of profit when the size of the successive shipment is a variable. Therefore, size of the successive shipment should be variable in order to get more profit. A sensitivity analysis of the optimal solution with respect to changes of the parameter values is also carried out to strengthen the proposed model.

Optimal manufacturer-buyer cooperative inventory models under unequal shipment policy with emergency replacement of sub-standard items

Optimal manufacturer-buyer cooperative inventory models under unequal shipment policy with emergency replacement of sub-standard items

A multi-vendor multi-buyer integrated production-inventory model with synchronised unequal-sized batch delivery

Integrating vendors’ and buyers’ production-inventory systems can significantly reduce the total costs incurred by both parties. In this paper, we study the synchronised multi-vendor multiple-buyer integrated production-inventory system with a production flow where the lot sizes follow a geometric sequence. We model this new problem with the objective to minimise the total cost incurred by the vendors and the buyers and determine the optimal production shipment policy. The computational experiments realised on real case study show the efficiency of the developed model for optimising production shipment and synchronisation of vendor-buyer inventories.

A POLICY-MAKING FRAMEWORK FOR ENHANCING THE KAOHSIUNG PORT’S ECONOMIC RESILIENCE

This paper is a revised and expanded version of a paper entitled ‘Influential indicators for measuring Kaohsiung port resilience’ presented at the International Forum on Shipping, Port, and Airports (IFSPA 2013), Hong Kong Polytechnic University, Hong Kong, 3–5 June 2013.
 The analytic hierarchy process (AHP) method commonly used in the issue of decision making was performed in this study to propose a policy-making framework for enhancing the Kaohsiung port’s economic resilience. A three-level hierarchical structure with 19 attributes is proposed and tested. Results indicate that adjusting the shipping policy is perceived as the most critical strategic dimension to enhance container port resilience. This is followed by increasing incentives, adjusting port operational strategy and exploiting market opportunities. Overall, results show that the five most important strategies for enhancing international container ports’ resilience are training of international marketing personnel, economic deregulation of shipping market across the Taiwan-Strait; subsidising the throughput of containers transhipment, subsidising coastal shipping operations and the alteration of dedicated terminals for rent. This study contributes in proposing a policy-making framework to enhance the container port’s economic resilience, and this framework could also be generalised to other ports.

Shipment Policies for Products with Fixed Shelf Lives: Impact on Profits and Waste

Problem definition: Our research is motivated by the product expiration problem in consumer packaged goods retailing, which creates substantial landfill waste and drains firm profits. We analyze shipment policies (i.e., the rules to determine the quantity and age composition of inventory to ship from a warehouse to a retail location) and their impact on profits and waste. Academic/practical relevance: The same firm often bears the cost of expiration at the warehouse and the retail store, which is why the problem necessitates a supply chain perspective. The ship oldest first (SOF) policy (commonly referred to as first in, first out) is advocated by industry experts to manage product shelf lives. Although its optimality in a single location is well established in the literature, it has not been studied in the context of a two-stage supply chain. Methodology: We conduct empirical analysis on a real-life data set to motivate the relevance of our problem. Then, we formulate an infinite horizon dynamic programming problem with stochastic demand for which we obtain analytical and numerical results. Results: The SOF policy is found to always minimize waste at the warehouse and total waste (warehouse and retail level combined) and under certain practically unlikely conditions, to maximize profits. However, in most practical applications, it is suboptimal, and the optimal policy is shown to have a complex structure. We analyze deterministic and myopic versions of our problem in order to generate insights on the trade-off between the issuing cost and the expiration cost. Then, we develop heuristic policies based on the myopic analysis of the problem, which are shown to perform well in terms of profits, waste, and product freshness; in our numerical analysis, the best such heuristic yields a median optimality gap of 9.5% versus 21% for SOF, pantry life of 69% versus 56% for SOF, and retail waste of 4% versus 10% for SOF. Managerial implications: The SOF policy is shown to generate high waste at the retail store, where waste is more likely to be disposed of at landfills as opposed to being donated; therefore, it may have an adverse impact on the environment. Our results also show that it is not effective at managing shelf lives in the supply chain, contrary to what practitioners argue, as evidenced by poor pantry life leading to excessive waste at the household level. Our analysis also questions the value of flow-through stocking systems to facilitate SOF as we show that firms can gain much more from improving their issuing policies.

The value of integration of full container load, less than container load and air freight shipments in vendor–managed inventory systems

We address a long–haul transportation problem of delivering a set of products from a producer to a customer, where Full Container Load (FCL) shipments on one side and Less than Container Load (LCL) or Air Freight shipments on the other side are integrated. A Vendor-Managed Inventory (VMI) approach is used: a decision-maker has to find a periodic shipping policy that minimizes the sum of transportation cost and inventory cost, both at the producer and at the customer. This problem is defined at the tactical level implying that the initial inventory levels at the producer and at the customer are not data, but decision variables. For this problem we formulate a Mixed Integer Linear Programming model and prove its computational complexity. Furthermore, we introduce the concept of Value of Integration of FCL and LCL/Air Freight shipments and prove performance bounds to show that the integration of FCL and LCL/Air Freight shipments can lead to significant cost savings, both in the worst case and on average. Systematic computational experiments are finally carried out.

Integrated optimization of inventory, replenishment and vehicle routing for a sustainable supply chain under carbon emission regulations

Integrated decision regarding routing plan for vehicles, inventory management and operational adjustments confer minimum cost and emission for a supply chain network. In view of the aforementioned facts, this paper develops a sustainable supply chain inventory management (SSCIM) model for a single-vendor and multiple-buyers’ integrated approach considering item deterioration and imperfect production simultaneously. A fleet of vehicles available at the vendor location are assigned to serve the buyers. Emissions generated through production, rework, transportation, warehousing and disposal of deteriorated items are taken into consideration. For the purpose of a cleaner and sustainable environment, several emission regulatory policies, namely, carbon tax, carbon cap-and-offset and cap-and-trade, are implemented so as to alleviate the effect of carbon emission by reducing its volume. The aforesaid scenarios are mathematically formulated in a bi-objective framework minimizing both total cost and overall emissions simultaneously subject to a well-built set of constraints. The bi-objective SSCIM focuses on obtaining a trade-off between cost and emissions, thereby determining the optimal production–shipment policy and a proper routing plan for the fleet of vehicles. For better illustration of the developed theory, numerical experiments are also carried out followed by an extensive discussion on the sensitivity analysis for various parameters.

Challenges and Prospects of Indigenous Shipowners’ Participation in Oil Shipment In Nigeria

If Nigeria's economy is essentially import based, then the issue and fact that her infrastructure for industrial development and export are grossly underdeveloped, when the nation is having abundant national mineral resources to improve on her foreign earning, being a maritime and oil producing nation, Nigeria is not gaining enough from this natural resources due to the poor position of policy guiding the shipping trade and oil business. In this research work emphasis was laid on indigenous shipping operations in the areas of cargo oil shipment (importation and exporting) with the necessary policy guiding the operation in the business i.e. the National Shipping Policy Act of April, 1987 and the United Nation Conference on Trade and Development (UNTAD) code of conduct on conference lines and the role of Nigerian National Petroleum Corporation (NNPC) in area of oil shipment as defined by the NNPC policy on oil transportation by sea. Emphasis on the demerits of foreign shipping lines, continued domination of the shipping trade particularly in area of oil cargo; the challenges, prospect and the need of indigenous participation in oil shipment business, that Nigeria can use at the benefit of balance of payment was researched. While, the foreign shipping lines and operators continue to dominate the oil shipment trade in Nigeria even at the turn of the 21st century, Nigeria's corporate policy on shipping especially as it affects her indigenous operations remains hazy and at best epileptic. This research work in addition unraveled some of the policy and action that have kept Nigerian Indigenous Shipping Companies in a perpetual state of near paralysis and how such avoidable trends could be reversed in favour of growth and development of the Nation in general. DOI: 10.7176/JRDM/77-04 Publication date: July 31 st 2021

INTEGRATION PROCESSES CHARACTERISTICS IN THE GLOBAL TRADE SHIPPING SYSTEM

Topicality. The shipping policy macroeconomic level takes the central place in the management system of merchant shipping and investment activity according to the development efficiency criteria. The economy is characterized by the building-up of integration processes at the current stage. Increasing production internationalization and globalization leads to the internationalization and globalization of transport and logistics systems and distribution networks. These processes activate the intensity and increase the international freight traffic volume. At the same time, globalization has dramatically changed the volume and model of freight traffic and increased the requirements for both international and local transport systems. Aim and tasks. The central task of the investigations is the choice of a criteria-based assessment system of economic and investment decisions. The study is aimed at clarifying the regularities of the merchant shipping individual segments functioning and at developing recommendations for solving urgent current and future projects for the national shipping potential development. Research results. The transport system efficiency is the economy development important factor. The main transport potential feature is the need of high level of regulation by country. This is due to the fact that: the development of transit potential is a capital-intensive process, and requires long-term investments; it has the monopolistic nature of the elements of the transport system; it needs for a special functional and legal regime of work; it is the reason of environmental problems because of increasing volumes and traffic intensity; it is especially important for national security. Macroeconomic goals to ensure the export transport services development, to use transit potential more efficiently, to increase the consumer transport competitiveness on the transport services international market could be actualized by the integration technology strategy implementation. Conclusion. The implementation of transport potential according to the integration criteria is an important factor of the modern economic development of the country, as, first of all, it is growth of employment, business activity, investments and tax revenues, on the other hand, it assists in integrating the Ukrainian economy into the European and world economic systems. The making economic decisions theory in the maritime transport system in the shipping market globalization context should be taken into account during the urgent economic problems solution.

Development of a Shipment Policy for Collection Centers

Natural disasters represent a latent threat for every country in the world. Due to climate change and other factors, statistics show that they continue to be on the rise. This situation presents a challenge for the communities and the humanitarian organizations to be better prepared and react faster to natural disasters. In some countries, in-kind donations represent a high percentage of the supply for the operations, which presents additional challenges. This research proposes a Markov Decision Process (MDP) model to resemble operations in collection centers, where in-kind donations are received, sorted, packed, and sent to the affected areas. The decision addressed is when to send a shipment considering the uncertainty of the donations’ supply and the demand, as well as the logistics costs and the penalty of unsatisfied demand. As a result of the MDP a Monotone Optimal Non-Decreasing Policy (MONDP) is proposed, which provides valuable insights for decision-makers within this field. Moreover, the necessary conditions to prove the existence of such MONDP are presented.

Consequence modelling for Arctic ship evacuations using expert knowledge

Risk-based decision-making is central to the development of Arctic shipping policy and regulation. Policy-makers within the International Maritime Organization rely on the Formal Safety Assessment (FSA) methodology to evaluate proposed regulatory changes and Arctic ship operators rely on it to establish operating limits and procedures. The FSA recommends incorporating life-safety consequence in the assessment of maritime industry risk. This paper presents an expert-based assessment of the factors that influence the potential for loss of life during an Arctic ship evacuation and quantified consequence severities for a range of evacuation scenarios. A two-phased mixed methods design is used to elicit expert knowledge. Sixteen experts in the fields of Arctic seafaring, policy and regulation, academia and research, and ship design participated in the study. Semi-structured interviews elicited perspectives on the factors that influence the expected number of fatalities resulting from an evacuation in Arctic waters. Surveys were administered in which evacuation scenarios were rated for the level of life-safety consequence severity they pose. This study provides a scenario-based life-safety consequence model for Arctic ship evacuations. Results show evacuation of passenger vessels poses the highest consequence severity of evaluated ship types. Response time and the time available to evacuate have the greatest levels of influence on consequence severity. Implications for Arctic marine policy include the need for enhanced competency and training for Arctic ship crews and SAR services, continued research and development of Arctic life-saving appliances to satisfy Polar Code functional requirements, heightened regulatory oversight of Arctic cruise operations, and consideration of inclusion of fishing vessels under the Polar Code. Application of the results to the FSA methodology is discussed.

Show Me the Money: The Economic Impact of Membership-Based Free Shipping Programs on E-Tailers

This research examines the economic impact of membership-based free shipping programs (MFS) when introduced as an augmentation to widely accepted contingent free shipping policies (CFS). Under CFS, consumers waive the shipping surcharge if the order exceeds a certain threshold, whereas, under MFS, consumers pay an upfront fee and enjoy the free-shipping perk throughout the membership period. We develop a stylized model that considers consumer heterogeneity in two dimensions: 1) disutility from acquiring an auxiliary product—a product that consumers would not otherwise purchase—to qualify for CFS, and 2) shopping frequency over a given period. Our analysis suggests that the introduction of MFS allows the e-tailer to segment the market further, which could lead to a higher product price. When the disutility from acquiring an auxiliary product is moderate, the e-tailer should charge a high membership fee to target only frequent shoppers who forgo CFS. However, the e-tailer should lower the fee to lure also: 1) frequent shoppers who would otherwise take CFS, when the disutility is high; or 2) infrequent shoppers who would otherwise forgo CFS, when the disutility is low. In all cases, while the collected fee revenue can never compensate for the costs arising from offering the free-shipping perk, the loss can be recouped as a desirable outcome of a more segmented market. Our research generates insights into the optimal design of e-tailers’ shipping policies, shedding light on the practical challenges that confront e-tailers.

Distribution free approach on electrical energy supply chain using geometric shipment policy

ABSTRACT We propose an inventory based optimisation model for a system of electricity supply chain. This distribution system consists of power plant, transmission substation and distribution substations and customers. The electricity generated by the power plant is transmitted to the submission and distribution substations and finally consumed by the customers. We apply the inventory theory to the distribution system and assume the electricity demand follows a distribution-free approach. This distribution system concerns the geometric shipment policy that is the size of each shipment is a multiple of the first shipment size. In particularly, two types of lead time crashed concepts are considered in this model. The main objective of this model is to find an optimal solution of first shipment lot size, blackout cost and simultaneously minimising the joint expected total cost. An iterative technique is used to find an optimal solution numerically and a sensitivity analysis table is presented to show the impact of different parameters