Lateral inventory share-based models for IoT-enabled E-commerce sustainable food supply networks

Abstract

This research investigates lateral inventory share-based business models for e-grocery networks where online groceries are inter-connected in an Internet of Things (IoT) environment. Recently managing food supplies has become a very important issue due to the onset of unexpected conditions such as natural disasters (earthquakes tsunamis floods droughts etc.) and pandemics. In this paper we aim to design sustainable food supply chain networks for e-commerce food companies (e.g. e-groceries) by applying lateral inventory share policies after the consideration of the existence of strategic alliances between organizations. We aim to minimize food waste as well as back orders resulting in more sustainable networks. Further we explore how a business-to-business (B2B) policy (i.e. lateral-inventory share policy) should be designed to optimize business (i.e. e-groceries) profitability. We optimize the re-order and up-to (sS) inventory levels of e-groceries for the pre-defined sharing policies by using a simulation optimization approach. The optimal results show that having a lateral inventory share poliIndiacy in food networks is more efficient compared to a non-lateral policy. Also at the optimal points of the considered policies lateral inventory share ratio is usually observed to be larger than 50% on average meaning that more than half of customer orders are met by lateral inventory share. © 2021 Elsevier B.V. All rights reserved.