{"title":"EXPRESS: E-tailer’s Inventory Location and Pricing with Strategic Consumers","authors":"Yuxin Chen, Meng Li, Chao Liang","doi":"10.1177/10591478241274644","DOIUrl":null,"url":null,"abstract":"This research examines how strategic consumer behavior influences e-tailers’ decisions on inventory storage locations, pricing strategies, and inventory levels. The e-tailer opts for either a single central warehouse, which has lower holding but higher shipping costs due to its distance from consumers, or a mix of central and proximal local warehouses, which reduces shipping costs but incurs higher holding costs. We find that local warehousing prompts consumers to delay purchases in hopes of discounts, compelling e-tailers to lower prices to encourage early buying. Consequently, the firm may not utilize the local warehouse. Intriguingly, we find that increased local storage expenses or diminished product durability could paradoxically elevate firm profits. Our numerical analysis highlights the benefits of strategically distributing inventory across both central and local warehouses, especially under conditions of reduced demand uncertainty. Moreover, we establish that our key insights persist in the case of multiple local warehouses.","PeriodicalId":20623,"journal":{"name":"Production and Operations Management","volume":null,"pages":null},"PeriodicalIF":4.8000,"publicationDate":"2024-08-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Production and Operations Management","FirstCategoryId":"91","ListUrlMain":"https://doi.org/10.1177/10591478241274644","RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"ENGINEERING, MANUFACTURING","Score":null,"Total":0}
引用次数: 0
Abstract
This research examines how strategic consumer behavior influences e-tailers’ decisions on inventory storage locations, pricing strategies, and inventory levels. The e-tailer opts for either a single central warehouse, which has lower holding but higher shipping costs due to its distance from consumers, or a mix of central and proximal local warehouses, which reduces shipping costs but incurs higher holding costs. We find that local warehousing prompts consumers to delay purchases in hopes of discounts, compelling e-tailers to lower prices to encourage early buying. Consequently, the firm may not utilize the local warehouse. Intriguingly, we find that increased local storage expenses or diminished product durability could paradoxically elevate firm profits. Our numerical analysis highlights the benefits of strategically distributing inventory across both central and local warehouses, especially under conditions of reduced demand uncertainty. Moreover, we establish that our key insights persist in the case of multiple local warehouses.
期刊介绍:
The mission of Production and Operations Management is to serve as the flagship research journal in operations management in manufacturing and services. The journal publishes scientific research into the problems, interest, and concerns of managers who manage product and process design, operations, and supply chains. It covers all topics in product and process design, operations, and supply chain management and welcomes papers using any research paradigm.