Order Strategies Of Decentralized Inventory Under Retailer Centralized Control

With the rapid development of information technology and e-commerce, more and more traditional retailers expand the business in network channel while maintain its business in traditional retail channel. In order to facilitate the management of network channel and traditional retail channel inventory, retailers generally use centralized control strategy to ordering and managing.Compared with the traditional two-channel supply chain, the channel conflict is smaller in the distributed inventory model under centralized control by retailer. From the perspective of retailers and the supply chain, in order to avoid the case of one channel is surplus stock and another channel is out of stock simultaneous, it’s a problem to be solved that whether inventory transshipment inventory between network channel and traditional retail channel to promote the efficiency of supply chain and increase retailer’s profit while meeting the demand of customers.Firstly, on the basis of the dual-channel supply chain related theoretical research, the paper analyzed the distributed inventory model under centralized control by retailer. Then, the paper analyzed the influence factors and indicated the direction of optimization.Then, based on the channel conflict, the paper analyzed the ordering strategy of dual-channel supply chain considering no inventory transshipment and inventory transshipment, taking customer defection into account while inventory transshipment happens. Aiming at maximizing profit, using the Newsboy model to build models for network channel and traditional retail channel under different conditionals. The paper studied the influence of inventory transshipment to the distributed inventory model under centralized control by retailer.Finally, by analysing an example, draw a conclusion that through inventory transshipment, the profit of retailer can increase and in certain circumstances the inventory level can be reduced. Meanwhile, considering inventory transshipment, the optimal order quantity of network channel and traditional retail channel will rise if transport price rises. With the increasing of customer defection rate, the profit of retailer will be lower. For different customer defection rate, there will be one optimal transport price where the retailer can have the highest profit.