WSEAS Transactions on Information Science and Applications
Print ISSN: 1790-0832, E-ISSN: 2224-3402
Volume 12, 2015
Analysis of Uncertainty Influence on an E-Tailer with a Threshold Policy and Alternative E-Fulfillment Options
Authors: , ,
Abstract: Drop shipping is very popular on the Internet. E-tailers use this service to fulfill customer demand. This study analyzes a supply chain consisting of a supplier and an e-tailer. The e-tailer uses a private inventory and drop shipping option for e-fulfillment, whereas the supplier provides replenishing and drop shipping service with limited capability for the e-tailer. The e-tailer selects a threshold policy in the private inventory and provides two different priorities to customer demand, namely, high priority demand and low priority demand. This paper designs a general framework to obtain the optimal threshold of the private inventory for the e-tailer to achieve his average profit maximization. We also analyze the impact of different uncertainties and proportion variability of high priority demand on the optimal threshold in different scenarios through Monte Carlo simulation. The results can provide a significant guideline for the e-tailers who adopt drop shipping as an alternative e-fulfillment option, especially when they face complex operating environments.
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Keywords: Uncertainty, Threshold Policy, E-fulfillment, Lead Time, Drop Shipping, Inventory, Alternative
Pages: 277-289
WSEAS Transactions on Information Science and Applications, ISSN / E-ISSN: 1790-0832 / 2224-3402, Volume 12, 2015, Art. #27