Get 20M+ Full-Text Papers For Less Than $1.50/day. Start a 7-Day Trial for You or Your Team.

Learn More →

Effect of Inventory Information Discrepancy in a Drop‐Shipping Supply Chain

Effect of Inventory Information Discrepancy in a Drop‐Shipping Supply Chain ABSTRACT This article investigates the impact of information discrepancy between a drop‐shipper and an online retailer on the drop‐shipping supply chain performance. The inventory information misalignment between them contributes to the failure of order fulfillment and demand satisfaction, and hence the associated penalties are incurred. In this article, we first analyze the penalties of ignoring such information discrepancy on both the drop‐shipper and the online retailer. We then assess the impact of information discrepancy on both parties when the drop‐shipper understands the existence of the information discrepancy but is not able to eliminate the errors. The numerical experiments indicate that both parties can have significant amount of the percentage cost reductions if the information discrepancy can be eliminated, and the potential savings are substantial especially when the errors have large variability. Furthermore, we observe that the online retailer is more vulnerable to information discrepancy than the drop‐shipper, and the drop‐shipper is likely to suffer from the online retailer's underestimation of the physical inventory level more than the problem of its overestimation. Moreover, even if eliminating errors is not possible, both parties could still benefit from taking the possibility of errors into consideration in decision making. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Decision Sciences Wiley

Effect of Inventory Information Discrepancy in a Drop‐Shipping Supply Chain

Cheong, Taesu; Goh, Mark; Song, Sang Hwa
Decision Sciences , Volume 46 (1) – Feb 1, 2015
Download PDF
21 pages

Loading next page...
 
/lp/wiley/effect-of-inventory-information-discrepancy-in-a-drop-shipping-supply-RNzFhHtMir

References (19)

Publisher
Wiley
Copyright
Copyright © 2015 Decision Sciences Institute
ISSN
0011-7315
eISSN
1540-5915
DOI
10.1111/deci.12122
Publisher site
See Article on Publisher Site

Abstract

ABSTRACT This article investigates the impact of information discrepancy between a drop‐shipper and an online retailer on the drop‐shipping supply chain performance. The inventory information misalignment between them contributes to the failure of order fulfillment and demand satisfaction, and hence the associated penalties are incurred. In this article, we first analyze the penalties of ignoring such information discrepancy on both the drop‐shipper and the online retailer. We then assess the impact of information discrepancy on both parties when the drop‐shipper understands the existence of the information discrepancy but is not able to eliminate the errors. The numerical experiments indicate that both parties can have significant amount of the percentage cost reductions if the information discrepancy can be eliminated, and the potential savings are substantial especially when the errors have large variability. Furthermore, we observe that the online retailer is more vulnerable to information discrepancy than the drop‐shipper, and the drop‐shipper is likely to suffer from the online retailer's underestimation of the physical inventory level more than the problem of its overestimation. Moreover, even if eliminating errors is not possible, both parties could still benefit from taking the possibility of errors into consideration in decision making.

Journal

Decision Sciences – Wiley

Published: Feb 1, 2015

There are no references for this article.