Fulfillment source allocation, inventory transshipment, and customer order transfer in e-tailing

S.A. Torabi, E. Hassini and M. Jeihoonian

Transportation Research Part E: Logistics and Transportation Review, 2015, vol. 79, issue C, 128-144

Abstract: We consider an inventory fulfillment-allocation and transshipment problem in an e-tailing environment. For a typical e-tailer, each customer demand is fulfilled from the closest fulfillment center if there are enough inventories. Otherwise, the e-tailer would transship stock from a nearby facility or transfer the customer order so it is fulfilled from another facility, depending on the economics of transportation. We develop a mixed-integer programming model to help e-tailers optimally fulfill customer orders while minimizing logistics costs. We propose a Benders decomposition-based approach to efficiently find optimal solutions. Our computational results demonstrate the importance of considering inventory transshipments in online deliveries.

Keywords: Online retail; Inventory transshipment; Supply chain coordination; Benders decomposition (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (24)

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DOI: 10.1016/j.tre.2015.04.004

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