Determining Safety Stock for an Omni-Channel Environment

Thi Ngan Pham, Albert Tan and Alvin Ang
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Thi Ngan Pham: Faculty of Business Administration,Ton Duc Thang University, VietNam
Albert Tan: Malaysia Institute for Supply Chain Innovation, Malaysia
Alvin Ang: National University of Singapore, Singapore

International Journal of Information Systems and Supply Chain Management (IJISSCM), 2020, vol. 13, issue 2, 59-76

Abstract: The purpose of this article is to determine the safety stock for an omni-channel environment. The “Square Root Law” (for centralization of storage facilities) was proposed to combine the safety stock for both online and offline channels. A simulation study was conducted using a spreadsheet program and three scenarios were created based on review time, lead time and safety factor. This was based on the mean demand and standard deviation of the product's demand distribution. The study found that the sum of lead time and review time are significant in determining the amount of safety stock, and demand variability is a crucial determinant for safety stock. Recommendations are provided as guidelines for lowering the amount of safety stock in omni-channel environment.

Date: 2020
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