s, S Inventory Control Optimization Under Inventory Sharing Policy for Omni-Channel Network

Rapidly developing technology and multi-channel integrations in marketing have led to the emergence of omnichannel retailing. In omnichannel, consumers can take advantage of all shopping channels interactively. It overcomes the drawbacks of traditional supply chain applications, but uncertain stock demands cause serious difficulties and costs. In this work, an inventory sharing policy study presented for an omnichannel network in order to reduce the risks caused by stock and demand uncertainty. In literature, this policy also referred to as lateral transshipment. Recently, due to the increase in e-commerce, it has become significant to respond to customer demands shortly for customer satisfaction. Inventory sharing allows the exchange of items between the same echelon of the supply chain network enabling high service levels with low costs. Since, in an omnichannel network, physical transshipment may not take place due to the electronic order case, we prefer to state this policy as inventory sharing instead of lateral transshipment. We develop simulation models for three different omnichannel scenarios and optimize the total network cost by considering those three sharing policies. We compare each scenario's optimal cost result. For the modeling and optimization purpose, we use the ARENA 16.0 commercial software and OptQuest to optimize the (s, S) inventory levels.