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A Study on the Production-Inventory Problem with Omni-Channel and Advance Sales Based on the Brand Owner’s Perspective

Author

Listed:
  • Jialiang Pan

    (School of Business and Management, Jiaxing Nanhu University, Jiaxing 314001, China
    These authors contributed equally to this work.)

  • Chi-Jie Lu

    (Graduate Institute of Business Administration, Fu Jen Catholic University, New Taipei City 242062, Taiwan
    Department of Information Management, Fu Jen Catholic University, New Taipei City 242062, Taiwan
    These authors contributed equally to this work.)

  • Wei-Jen Chen

    (Department of Business Administration, Tamkang University, New Taipei City 251301, Taiwan)

  • Kun-Shan Wu

    (Department of Business Administration, Tamkang University, New Taipei City 251301, Taiwan)

  • Chih-Te Yang

    (Department of Business Administration, Tamkang University, New Taipei City 251301, Taiwan)

Abstract

This study explores a supply chain product-inventory problem with advance sales under the omni-channel strategies (physical and online sales channels) based on the brand owner’s business model and develops corresponding models that have not been proposed in previous studies. In addition, because the brand owner is a member of the supply chain, and has different handling methods for defective products or products returned by customers in various retail channels, defective products or returned products are included in the supply chain models to comply with actual operating conditions and fill the research gap in the handling of defective/returned products. Regarding the mathematical model’s development, we first clarify the definition of model parameters and relevant data collection, and then establish the production-inventory models with omni-channel strategies and advance sales. The primary objective is to determine the optimal production, delivery, and replenishment decisions of the manufacturer, physical agent, and online e-commerce company in order to maximize the joint total profits of the entire supply chain system. Further, this study takes the supply chain system of mobile game steering wheel products as an example, uses data consistent with the actual situation to demonstrate the optimal solutions of the models, and conducts sensitivity analysis for the proposed model. The findings reveal that increased demand shortens the replenishment cycle and raises order quantity and shipment frequency in the physical channel, similar to the online channel during normal sales. However, during the online pre-order period, higher demand reduces order quantity and cycle length but still increases shipment frequency. Rising ordering or fixed shipping costs lead to higher order quantity and cycle length in both channels, but variable shipping costs in the online channel reduce them. Market price increases boost order quantity and frequency in the online channel, while customer return rates significantly impact inventory decisions.

Suggested Citation

  • Jialiang Pan & Chi-Jie Lu & Wei-Jen Chen & Kun-Shan Wu & Chih-Te Yang, 2024. "A Study on the Production-Inventory Problem with Omni-Channel and Advance Sales Based on the Brand Owner’s Perspective," Mathematics, MDPI, vol. 12(19), pages 1-24, October.
    • Handle: RePEc:gam:jmathe:v:12:y:2024:i:19:p:3122-:d:1492989
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    References listed on IDEAS

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