s S Inventory Control Optimization Under Inventory Sharing Policy for Omni-Channel Network

Abstract

Rapidly developing technology and multi-channel integrations in marketing have led to the emergence of omnichannel retailing. In omnichannel consumers can take advantage of all shopping channels interactively. It overcomes the drawbacks of traditional supply chain applications but uncertain stock demands cause serious difficulties and costs. In this work an inventory sharing policy study presented for an omnichannel network in order to reduce the risks caused by stock and demand uncertainty. In literature this policy also referred to as lateral transshipment. Recently due to the increase in e-commerce it has become significant to respond to customer demands shortly for customer satisfaction. Inventory sharing allows the exchange of items between the same echelon of the supply chain network enabling high service levels with low costs. Since in an omnichannel network physical transshipment may not take place due to the electronic order case we prefer to state this policy as inventory sharing instead of lateral transshipment. We develop simulation models for three different omnichannel scenarios and optimize the total network cost by considering those three sharing policies. We compare each scenario's optimal cost result. For the modeling and optimization purpose we use the ARENA 16.0 commercial software and OptQuest to optimize the (s S) inventory levels.