Digital Commons Network^™

Integrating Anticipative Replenishment-Allocation With Reactive Fulfillment For Online Retailing Using Robust Optimization, Yun Fong Lim, Song Jiu, Marcus Ang

Research Collection Lee Kong Chian School Of Business

Problem definition: In each period of a planning horizon, an online retailer decides on how much to replenish each product and how to allocate its inventory to fulfillment centers (FCs) before demand is known. After the demand in the period is realized, the retailer decides on which FCs to fulfill it. It is crucial to optimize the replenishment, allocation, and fulfillment decisions jointly such that the expected total operating cost is minimized. The problem is challenging because the replenishment-allocation is done in an anticipative manner under a “push” strategy, but the fulfillment is executed in a reactive way under a …