Lateral inventory transshipment problem in online-to-offline supply chain

• Online-to-offline (OTO) is a new commercial model with enormous market potential. Online customer orders are forwarded to the offline brick-and-mortar store to fulfil, which is a combination of dual-channel supply chain. OTO overcomes many disadvantages of the traditional dual-channel supply chain, but still faces uncertain market demand. To reduce the inventory risk caused by demand uncertainty, lateral inventory transshipment is employed in this paper to pool inventory risk in OTO supply chain. We model centralised OTO and decentralised OTO with/without transshipment, and then analyse different scenarios. Our results demonstrate that there exists a unique Nash equilibrium of inventory order levels in dual channels and an optimal transshipment price to maximise the profit of the entire supply chain. Finally, we provide a numerical example of uniform demand distribution. Our analyses offer many managerial insights and show that transshipment always benefits the OTO supply chain.

Subject headings

SAMHÄLLSVETENSKAP  -- Ekonomi och näringsliv (hsv//swe)

SOCIAL SCIENCES  -- Economics and Business (hsv//eng)

Keyword

inventory transshipment

demand uncertainty

dual-channel supply chain

online-to-offline (OTO)

Publication and Content Type

ref (subject category)

art (subject category)