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Single-period assortment and stock-level decisions for dual sales channels with capacity limits and uncertain demand

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  • Joseph Geunes
  • Yiqiang Su

Abstract

This paper addresses a dual channel, clicks-and-mortar retailer's problem of determining which among a set of products with seasonal demand will occupy limited retail shelf space, which products will be offered via an online channel, and which items will be available through both channels. Using a consumer choice model in which the set of products offered influences each product's demand in each channel, we consider stocking and price decisions under uncertain demand in a single-period setting with a constraint on the probability of stocking out. The resulting model is a large-scale, chance-constrained, two-stage stochastic programme. We propose a sample average approximation (SAA) method that permits quickly arriving at near-optimal solutions for this complex problem class. We also exercise the proposed model to gain insights on the problem's key tradeoffs and properties of optimal solutions.

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  • Joseph Geunes & Yiqiang Su, 2020. "Single-period assortment and stock-level decisions for dual sales channels with capacity limits and uncertain demand," International Journal of Production Research, Taylor & Francis Journals, vol. 58(18), pages 5579-5600, September.
    • Handle: RePEc:taf:tprsxx:v:58:y:2020:i:18:p:5579-5600
    DOI: 10.1080/00207543.2019.1693648
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    Cited by:

    1. Sheshadri Chatterjee & Ranjan Chaudhuri & Sachin Kamble & Shivam Gupta & Uthayasankar Sivarajah, 2023. "Adoption of Artificial Intelligence and Cutting-Edge Technologies for Production System Sustainability: A Moderator-Mediation Analysis," Information Systems Frontiers, Springer, vol. 25(5), pages 1779-1794, October.
    2. Hense, Jonas & Hübner, Alexander, 2022. "Assortment optimization in omni-channel retailing," European Journal of Operational Research, Elsevier, vol. 301(1), pages 124-140.
    3. Chen, Yajing & Wu, Zhimin & Wang, Yunlong, 2024. "Omnichannel product selection and shelf space planning optimization," Omega, Elsevier, vol. 127(C).
    4. Guan, Zhimin & Mou, Yuxia & Zhang, Jun, 2024. "Incorporating risk aversion and time preference into omnichannel retail operations considering assortment and inventory optimization," European Journal of Operational Research, Elsevier, vol. 314(2), pages 579-596.
    5. Hübner, Alexander & Hense, Jonas & Dethlefs, Christian, 2022. "The revival of retail stores via omnichannel operations: A literature review and research framework," European Journal of Operational Research, Elsevier, vol. 302(3), pages 799-818.
    6. Çömez-Dolgan, Nagihan & Dağ, Hilal & Fescioglu-Unver, Nilgun & Şen, Alper, 2023. "Multi-plant manufacturing assortment planning in the presence of transshipments," European Journal of Operational Research, Elsevier, vol. 310(3), pages 1033-1050.
    7. Schäfer, Fabian & Hense, Jonas & Hübner, Alexander, 2023. "An analytical assessment of demand effects in omni-channel assortment planning," Omega, Elsevier, vol. 115(C).

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