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Dynamic Lot-Sizing Models for Retailers with Online Channels

Author

Listed:
  • Haoxuan Xu

    (EM - EMLyon Business School)

  • Yeming Gong
  • Chengbin Chu
  • Jinlong Zhang

Abstract

This paper studies inventory replenishment planning problems for retailers with online channels. Such retailer is able to obtain advance demand information (ADI) in an environment of time-varying demands. We incorporate ADI into dynamic lot-sizing models to formulate the replenishment planning problems for retailers in three scenarios: (1) companies act as pure-play online retailers with customers homogeneous in demand lead time, (2) online customers are heterogeneous in demand lead time with priorities, and (3) retailers operate in a bricks and clicks structure, in which demands come from online and offline channels, with either independent or interactive channels. We formulate the problem in the general scenario of interactive demand channels as a mixed-integer linear programming model, and then develop a unified model through reformulation. Based on the optimality properties, we design a dynamic programming algorithm with polynomial running time to solve the unified model. The numerical experiments for several online retailers find that the method can significantly reduce the total inventory cost.

Suggested Citation

  • Haoxuan Xu & Yeming Gong & Chengbin Chu & Jinlong Zhang, 2017. "Dynamic Lot-Sizing Models for Retailers with Online Channels," Post-Print hal-02311919, HAL.
    • Handle: RePEc:hal:journl:hal-02311919
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    Citations

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    Cited by:

    1. 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.
    2. Alım, Muzaffer & Beullens, Patrick, 2022. "Improving inventory system performance by selective purchasing of buyers’ willingness to wait," European Journal of Operational Research, Elsevier, vol. 300(1), pages 124-136.
    3. MacCarthy, Bart L. & Zhang, Lina & Muyldermans, Luc, 2019. "Best Performance Frontiers for Buy-Online-Pickup-in-Store order fulfilment," International Journal of Production Economics, Elsevier, vol. 211(C), pages 251-264.
    4. Li, Xiang & Li, Yongjian & Cao, Wenjing, 2019. "Cooperative advertising models in O2O supply chains," International Journal of Production Economics, Elsevier, vol. 215(C), pages 144-152.
    5. Alım, Muzaffer & Beullens, Patrick, 2020. "Joint inventory and distribution strategy for online sales with a flexible delivery option," International Journal of Production Economics, Elsevier, vol. 222(C).
    6. Saha, Kushal & Bhattacharya, Subir, 2021. "‘Buy online and pick up in-store’: Implications for the store inventory," European Journal of Operational Research, Elsevier, vol. 294(3), pages 906-921.
    7. Wu, Xiang & (Yale) Gong, Yeming & Xu, Haoxuan & Chu, Chengbin & Zhang, Jinlong, 2017. "Dynamic lot-sizing models with pricing for new products," European Journal of Operational Research, Elsevier, vol. 260(1), pages 81-92.

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