Article ID: | iaor2006714 |
Country: | United Kingdom |
Volume: | 41 |
Issue: | 3 |
Start Page Number: | 159 |
End Page Number: | 177 |
Publication Date: | May 2005 |
Journal: | Transportation Research. Part E, Logistics and Transportation Review |
Authors: | Rabinovich Elliot, Bailey Joseph P. |
Keywords: | organization, optimization, e-commerce |
Internet retailing models support supply chains where consumer order locations are decoupled from inventory locations. In this setting, retailers dynamically consider inventory location speculation and postponement to fulfill their orders. Particularly, retailers can manage to fulfill orders through two opposing strategies: in-stock inventory and drop-shipping. This paper extends the supply chain management literature by modeling Internet retailers' decisions to balance their offerings between these two strategies. The results show how retailers depend more on both of these strategies as their market share and product popularity increase. Thus, both inventory management strategies may be considered simultaneously to better manage Internet retailers' inventory.