Primal–Dual Algorithms for Order Fulfillment at Urban Outfitters, Inc

John M. Andrews (), Vivek F. Farias (), Aryan I. Khojandi () and Chad M. Yan ()
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John M. Andrews: Celect, Inc., Boston, Massachusetts 02110;
Vivek F. Farias: Celect, Inc., Boston, Massachusetts 02110; MIT, Cambridge, Massachusetts 02139;
Aryan I. Khojandi: Celect, Inc., Boston, Massachusetts 02110;
Chad M. Yan: Celect, Inc., Boston, Massachusetts 02110

Interfaces, 2019, vol. 49, issue 5, 355-370

Abstract: We formulate the omni-channel fulfillment problem as an online optimization problem. We propose a novel algorithm for this problem based on the primal–dual schema. Our algorithm is robust: It does not require explicit demand forecasts. This is an important practical advantage in the apparel-retail setting, where demand is volatile and unpredictable. We provide a performance analysis establishing that our algorithm admits optimal performance guarantees in the face of adversarial demand. We describe a large-scale implementation of our algorithm at Urban Outfitters, Inc. This implementation processes on average 18,000 customer orders a day and as many as 100,000 orders on peak demand days. The system has resulted in substantial savings relative to an incumbent industry-standard fulfillment optimization implementation through optimal order-fulfillment decisions that simultaneously increase turn and lower shipping costs.

Keywords: approximation algorithms; primal–dual algorithms; multinode fulfillment optimization; inventory management (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:inm:orinte:v:49:y:2019:i:5:p:355-370

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