Inventory Share Policy Designs for a Sustainable Omni-Chanel E-commerce Network

Abstract

This paper studies inventory share policies for sustainable omni-channel e-commerce supply network design by seeking for a good integration policy of online and offline retailers so that the overall supply network reduce its cost environmental negative impacts by the decreased number of shipments from the main depot and increase its responsiveness. By the recent advancement in information technologies and internet use e-commerce practice gained popularity also to keep up with the competitive environment. The increased competitive supply chain environment has revealed the business-to-business (B2B) concepts enabling business applications between companies. Strategic alliance is a partnership concept realized between two or more organizations ensuring that stages are managed with consideration of the welfare of the others in the whole network. By considering that there are inventory share policies between stages we accept the existence of strategic alliance implementation in the network aiming to increase total network flexibility and profitability as well as sustainability in the network. In the study we research inventory share policies towards strategic alliance concept to have a network design with a decreased negative effect of demand uncertainty and increased profitability in the network. By inventory share policies businesses share their current inventories with the others so that transportation cost and CO2 emission caused by traffic intensity is decreased in the network. We propose six inventory share policy combinations and optimize the (s S) inventory levels under those policies by minimizing total network cost. We utilize the simulation modeling approach for the modeling purpose. We compare the policy results based on the total network cost the total number of shipments completed from the main warehouse and total lost sale cost etc. at the optimal levels and suggest the best policy design.