IDEAS home Printed from https://ideas.repec.org/a/eee/proeco/v209y2019icp70-77.html
   My bibliography  Save this article

Transshipments of cross-channel returned products

Author

Listed:
  • Dijkstra, Arjan S.
  • Van der Heide, Gerlach
  • Roodbergen, Kees Jan

Abstract

Companies increasingly employ dual-channeling strategies with online and offline channels to reach customers. The combination of high return rates in e-commerce and the possibility for customers to return products ordered online at any offline store may result in unbalanced inventories. Transshipments can be used to deal with these unbalanced inventories. In this paper we study dynamic policies for transshipment of products that are returned cross-channel from online to offline stores. At the end of each period in a finite sales season, cross-channel returned products can be transshipped back to the online store or kept on-hand at the offline store. Optimal transshipment policies are obtained using a Markov decision process. We introduce a well-performing heuristic based on the expected costs during the sales season, with a maximum deviation of 1.59% from the optimal costs in experiments. Furthermore, we show that in all instances our heuristic outperforms static policies in which products are either always or never shipped back to the online store. We observe that dynamic transshipment policies are more effective than static policies in dealing with imbalances in the initial stock. Dynamic transshipment of cross-channel returns seems to open up possibilities for more effective demand fulfillment of dual-channel companies.

Suggested Citation

  • Dijkstra, Arjan S. & Van der Heide, Gerlach & Roodbergen, Kees Jan, 2019. "Transshipments of cross-channel returned products," International Journal of Production Economics, Elsevier, vol. 209(C), pages 70-77.
    • Handle: RePEc:eee:proeco:v:209:y:2019:i:c:p:70-77
    DOI: 10.1016/j.ijpe.2017.09.001
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0925527317302852
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ijpe.2017.09.001?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. W-K Ching & W-O Yuen & A W Loh, 2003. "An inventory model with returns and lateral transshipments," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 54(6), pages 636-641, June.
    2. Hossein Abouee-Mehrizi & Oded Berman & Shrutivandana Sharma, 2015. "Optimal Joint Replenishment and Transshipment Policies in a Multi-Period Inventory System with Lost Sales," Operations Research, INFORMS, vol. 63(2), pages 342-350, April.
    3. Tai, Allen H. & Ching, Wai-Ki, 2014. "Optimal inventory policy for a Markovian two-echelon system with returns and lateral transshipment," International Journal of Production Economics, Elsevier, vol. 151(C), pages 48-55.
    4. Kiesmuller, Gudrun P. & van der Laan, Erwin A., 2001. "An inventory model with dependent product demands and returns," International Journal of Production Economics, Elsevier, vol. 72(1), pages 73-87, June.
    5. H. Jönsson & E. A. Silver, 1987. "Analysis of a Two-Echelon Inventory Control System with Complete Redistribution," Management Science, INFORMS, vol. 33(2), pages 215-227, February.
    6. Reut Noham & Michal Tzur, 2014. "The single and multi‐item transshipment problem with fixed transshipment costs," Naval Research Logistics (NRL), John Wiley & Sons, vol. 61(8), pages 637-664, December.
    7. Au, Kin-Fan & Choi, Tsan-Ming & Yu, Yong, 2008. "Fashion retail forecasting by evolutionary neural networks," International Journal of Production Economics, Elsevier, vol. 114(2), pages 615-630, August.
    8. Fang Liu & Jing-Sheng Song & Jordan D. Tong, 2016. "Building Supply Chain Resilience through Virtual Stockpile Pooling," Production and Operations Management, Production and Operations Management Society, vol. 25(10), pages 1745-1762, October.
    9. Paterson, Colin & Teunter, Ruud & Glazebrook, Kevin, 2012. "Enhanced lateral transshipments in a multi-location inventory system," European Journal of Operational Research, Elsevier, vol. 221(2), pages 317-327.
    10. Felipe Caro & Jérémie Gallien, 2012. "Clearance Pricing Optimization for a Fast-Fashion Retailer," Operations Research, INFORMS, vol. 60(6), pages 1404-1422, December.
    11. Firouz, Mohammad & Keskin, Burcu B. & Melouk, Sharif H., 2017. "An integrated supplier selection and inventory problem with multi-sourcing and lateral transshipments," Omega, Elsevier, vol. 70(C), pages 77-93.
    12. Olsson, Fredrik, 2015. "Emergency lateral transshipments in a two-location inventory system with positive transshipment leadtimes," European Journal of Operational Research, Elsevier, vol. 242(2), pages 424-433.
    13. 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.
    14. Mostard, Julien & Teunter, Ruud, 2006. "The newsboy problem with resalable returns: A single period model and case study," European Journal of Operational Research, Elsevier, vol. 169(1), pages 81-96, February.
    15. Sven Axsäter & Christian Howard & Johan Marklund, 2013. "A distribution inventory model with transshipments from a support warehouse," IISE Transactions, Taylor & Francis Journals, vol. 45(3), pages 309-322.
    16. Agrawal, Vipul & Chao, Xiuli & Seshadri, Sridhar, 2004. "Dynamic balancing of inventory in supply chains," European Journal of Operational Research, Elsevier, vol. 159(2), pages 296-317, December.
    17. Paterson, Colin & Kiesmüller, Gudrun & Teunter, Ruud & Glazebrook, Kevin, 2011. "Inventory models with lateral transshipments: A review," European Journal of Operational Research, Elsevier, vol. 210(2), pages 125-136, April.
    18. Fleischmann, Moritz & Bloemhof-Ruwaard, Jacqueline M. & Dekker, Rommert & van der Laan, Erwin & van Nunen, Jo A. E. E. & Van Wassenhove, Luk N., 1997. "Quantitative models for reverse logistics: A review," European Journal of Operational Research, Elsevier, vol. 103(1), pages 1-17, November.
    19. Mitra, Subrata, 2009. "Analysis of a two-echelon inventory system with returns," Omega, Elsevier, vol. 37(1), pages 106-115, February.
    20. Lee, Young Hae & Jung, Jung Woo & Jeon, Young Sang, 2007. "An effective lateral transshipment policy to improve service level in the supply chain," International Journal of Production Economics, Elsevier, vol. 106(1), pages 115-126, March.
    21. Hochmuth, Christian A. & Köchel, Peter, 2012. "How to order and transship in multi-location inventory systems: The simulation optimization approach," International Journal of Production Economics, Elsevier, vol. 140(2), pages 646-654.
    22. Mantrala, Murali K. & Raman, Kalyan, 1999. "Demand uncertainty and supplier's returns policies for a multi-store style-good retailer," European Journal of Operational Research, Elsevier, vol. 115(2), pages 270-284, June.
    23. Christian Howard & Johan Marklund & Tarkan Tan & Ingrid Reijnen, 2015. "Inventory Control in a Spare Parts Distribution System with Emergency Stocks and Pipeline Information," Manufacturing & Service Operations Management, INFORMS, vol. 17(2), pages 142-156, May.
    24. Kevin Glazebrook & Colin Paterson & Sandra Rauscher & Thomas Archibald, 2015. "Benefits of Hybrid Lateral Transshipments in Multi-Item Inventory Systems under Periodic Replenishment," Production and Operations Management, Production and Operations Management Society, vol. 24(2), pages 311-324, February.
    25. Banerjee, Avijit & Burton, Jonathan & Banerjee, Snehamay, 2003. "A simulation study of lateral shipments in single supplier, multiple buyers supply chain networks," International Journal of Production Economics, Elsevier, vol. 81(1), pages 103-114, January.
    26. Paul Zipkin, 2008. "Old and New Methods for Lost-Sales Inventory Systems," Operations Research, INFORMS, vol. 56(5), pages 1256-1263, October.
    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. Griffin, Emily C. & Keskin, Burcu B. & Allaway, Arthur W., 2023. "Clustering retail stores for inventory transshipment," European Journal of Operational Research, Elsevier, vol. 311(2), pages 690-707.
    2. Zhang, Peng & Xu, Xiaofeng & Shi, Victor & Zhu, Jing, 2020. "Simultaneous inventory competition and transshipment between retailers," International Journal of Production Economics, Elsevier, vol. 230(C).
    3. Yang, Guangyong & Ji, Guojun, 2022. "The impact of cross-selling on managing consumer returns in omnichannel operations," Omega, Elsevier, vol. 111(C).
    4. Jian Liu & Xinyue Sun & Yanyan Liu, 2022. "Products pricing and return strategies for the dual channel retailers," Operational Research, Springer, vol. 22(4), pages 3841-3867, September.
    5. Yan, Shuai & Archibald, Thomas Welsh & Han, Xiaohua & Bian, Yiwen, 2022. "Whether to adopt “buy online and return to store” strategy in a competitive market?," European Journal of Operational Research, Elsevier, vol. 301(3), pages 974-986.
    6. Jin, Delong & Caliskan-Demirag, Ozgun & Chen, Frank (Youhua) & Huang, Min, 2020. "Omnichannel retailers’ return policy strategies in the presence of competition," International Journal of Production Economics, Elsevier, vol. 225(C).
    7. Goedhart, Joost & Haijema, René & Akkerman, Renzo, 2023. "Modelling the influence of returns for an omni-channel retailer," European Journal of Operational Research, Elsevier, vol. 306(3), pages 1248-1263.

    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. García-Benito, Juan Carlos & Martín-Peña, María-Luz, 2021. "A redistribution model with minimum backorders of spare parts: A proposal for the defence sector," European Journal of Operational Research, Elsevier, vol. 291(1), pages 178-193.
    2. Christian Weckenborg & Bastian Vorwerk & Thomas S. Spengler, 2024. "A proactive transshipment model for prototype parts logistics in the automotive industry," Journal of Business Economics, Springer, vol. 94(9), pages 1147-1168, November.
    3. Dehghani, Maryam & Abbasi, Babak & Oliveira, Fabricio, 2021. "Proactive transshipment in the blood supply chain: A stochastic programming approach," Omega, Elsevier, vol. 98(C).
    4. Naderi, Siamak & Kilic, Kemal & Dasci, Abdullah, 2020. "A deterministic model for the transshipment problem of a fast fashion retailer under capacity constraints," International Journal of Production Economics, Elsevier, vol. 227(C).
    5. Dehghani, Maryam & Abbasi, Babak, 2018. "An age-based lateral-transshipment policy for perishable items," International Journal of Production Economics, Elsevier, vol. 198(C), pages 93-103.
    6. Dhahri, Akrem & Gharbi, Ali & Ouhimmou, Mustapha, 2022. "Integrated production-transshipment control policy for a two-location unreliable manufacturing system," International Journal of Production Economics, Elsevier, vol. 247(C).
    7. Yongchang Wei & Fangyu Chen & Feng Xiong, 2018. "Dynamic Complexities in a Supply Chain System with Lateral Transshipments," Complexity, Hindawi, vol. 2018, pages 1-15, June.
    8. Paterson, Colin & Kiesmüller, Gudrun & Teunter, Ruud & Glazebrook, Kevin, 2011. "Inventory models with lateral transshipments: A review," European Journal of Operational Research, Elsevier, vol. 210(2), pages 125-136, April.
    9. Van der Heide, G. & Roodbergen, K.J. & Van Foreest, N.D., 2021. "Cross docking for libraries with a depot," European Journal of Operational Research, Elsevier, vol. 290(2), pages 749-765.
    10. Topan, E. & Eruguz, A.S. & Ma, W. & van der Heijden, M.C. & Dekker, R., 2020. "A review of operational spare parts service logistics in service control towers," European Journal of Operational Research, Elsevier, vol. 282(2), pages 401-414.
    11. Zümbül Atan & Lawrence V. Snyder & George R. Wilson, 2018. "Transshipment policies for systems with multiple retailers and two demand classes," OR Spectrum: Quantitative Approaches in Management, Springer;Gesellschaft für Operations Research e.V., vol. 40(1), pages 159-186, January.
    12. Tai, Allen H. & Ching, Wai-Ki, 2014. "Optimal inventory policy for a Markovian two-echelon system with returns and lateral transshipment," International Journal of Production Economics, Elsevier, vol. 151(C), pages 48-55.
    13. Meissner, Joern & Senicheva, Olga V., 2018. "Approximate dynamic programming for lateral transshipment problems in multi-location inventory systems," European Journal of Operational Research, Elsevier, vol. 265(1), pages 49-64.
    14. Zhou, Zihan & Wang, Xinhui, 2023. "Replenishment and transshipment in periodic-review systems with a fixed order cost," European Journal of Operational Research, Elsevier, vol. 307(3), pages 1240-1247.
    15. Griffin, Emily C. & Keskin, Burcu B. & Allaway, Arthur W., 2023. "Clustering retail stores for inventory transshipment," European Journal of Operational Research, Elsevier, vol. 311(2), pages 690-707.
    16. Hadar Amrani & Eugene Khmelnitsky, 2017. "Optimal division of inventory between depot and bases," Naval Research Logistics (NRL), John Wiley & Sons, vol. 64(1), pages 3-18, February.
    17. Topan, E. & van der Heijden, M.C., 2020. "Operational level planning of a multi-item two-echelon spare parts inventory system with reactive and proactive interventions," European Journal of Operational Research, Elsevier, vol. 284(1), pages 164-175.
    18. LI, Li, 2019. "Cooperative purchasing and preactive inventory sharing – Channel balancing and performance improvement," European Journal of Operational Research, Elsevier, vol. 278(3), pages 738-751.
    19. Van der Heide, G. & Roodbergen, K.J., 2013. "Transshipment and rebalancing policies for library books," European Journal of Operational Research, Elsevier, vol. 228(2), pages 447-456.
    20. Bhatnagar, Rohit & Lin, Bing, 2019. "The joint transshipment and production control policies for multi-location production/inventory systems," European Journal of Operational Research, Elsevier, vol. 275(3), pages 957-970.

    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:eee:proeco:v:209:y:2019:i:c:p:70-77. 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: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ijpe .

    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.