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Joint Dynamic Pricing And Order Fulfillment For E Commerce Retailers
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Book Synopsis Joint Dynamic Pricing and Order Fulfillment for E-Commerce Retailers by : Yanzhe (Murray) Lei
Download or read book Joint Dynamic Pricing and Order Fulfillment for E-Commerce Retailers written by Yanzhe (Murray) Lei and published by . This book was released on 2017 with total page 43 pages. Available in PDF, EPUB and Kindle. Book excerpt: We consider an e-commerce retailer (e-tailer) who sells a catalog of products to customers from different regions during a finite selling season and fulfills orders through multiple fulfillment centers. The e-tailer faces a Joint Pricing and Fulfillment (JPF) problem: At the beginning of each period, she needs to jointly decide the price for each product and how to fulfill an incoming order. The objective is to maximize the total expected profits defined as total expected revenues minus total expected shipping costs (all other costs are fixed in this problem). The exact optimal policy for JPF is difficult to solve; so, we propose two heuristics that have provably good performance compared to reasonable benchmarks. Our first heuristic directly uses the solution of a deterministic approximation of JPF as its control parameters whereas our second heuristic improves the first heuristic by adaptively adjusting the original control parameters at the beginning of every period. An important feature of the second heuristic is that it decouples the pricing and fulfillment decisions, making it easy to implement. We show theoretically and numerically that the second heuristic significantly outperforms the first heuristic and is very close to a benchmark that jointly re-optimizes the full deterministic problem at every period.
Book Synopsis Joint Product Framing (Display, Ranking, Pricing) and Order Fulfillment Under the MNL Model for E-Commerce Retailers by : Yanzhe (Murray) Lei
Download or read book Joint Product Framing (Display, Ranking, Pricing) and Order Fulfillment Under the MNL Model for E-Commerce Retailers written by Yanzhe (Murray) Lei and published by . This book was released on 2020 with total page 46 pages. Available in PDF, EPUB and Kindle. Book excerpt: Problem definition: We study a joint product framing and order fulfillment problem with both inventory and cardinality constraints faced by an e-commerce retailer. There is a finite selling horizon and no replenishment opportunity. In each period, the retailer needs to decide how to “frame” (i.e., display, rank, price) each product on her website as well as how to fulfill a new demand. Academic/Practical Relevance: E-commerce retail is known to suffer from thin profit margins. Using the data from a major U.S. retailer, we show that jointly planning product framing and order fulfillment can have a significant impact on online retailers' profitability. This is a technically challenging problem as it involves both inventory and cardinality constraints. In this paper, we make progress toward resolving this challenge. Methodology: We use techniques such as randomized algorithms and graph-based algorithms to provide a tractable solution heuristic which we analyze through asymptotic analysis. Results: Our proposed randomized heuristic policy is based on the solution of a deterministic approximation to the stochastic control problem. The key challenge is in constructing a randomization scheme that is easy to implement and that guarantees the resulting policy is asymptotically optimal. We propose a novel two-step randomization scheme based on the idea of matrix decomposition and a re-scaling argument. Managerial Implications: Using the data of a U.S. retailer, we show that when inventory across the network is imbalanced, the widespread practice of planning product framing without considering its impact on fulfillment can result in high shipping costs, regardless of the fulfillment policy used. Our proposed policy significantly reduces shipping costs by using product framing to manage demand so that it occurs close to the location of the inventory. Our numerical tests show that the proposed heuristic is very close to optimal, can be applied to large-scale problems in practice, and highlights the value of jointly optimizing product framing and order fulfillment decisions.
Book Synopsis Challenges for the order fulfillment process of online retailers due to the COVID-19 pandemic by : Paul Heck
Download or read book Challenges for the order fulfillment process of online retailers due to the COVID-19 pandemic written by Paul Heck and published by GRIN Verlag. This book was released on 2020-08-26 with total page 9 pages. Available in PDF, EPUB and Kindle. Book excerpt: Essay from the year 2020 in the subject Business economics - Supply, Production, Logistics, grade: 2,0, Cologne Business School Köln, language: English, abstract: This paper aims to identify the challenges for the fulfillment process of online retailers due to the COVID 19 pandemic. No other topic dominates the current public perception more than COVID-19. National, federal and local authorities require their citizens to stay at home and avoid social contact during the pandemic. The result is an e-commerce boom, with online retail orders increasing for example in the US by 146% in comparison to the previous year. However, customers experience that many well-known benefits, such as a seemingly endless selection of affordable products or shipping in two days, are no longer guaranteed. The reason lies in the process of order fulfillment. This process encompasses all the activities a company undertakes from the moment an order is received until the items are delivered, including all customer services. It comprises back-office activities such as packaging, delivery, accounting, inventory management, and shipping as well as front-office activities such as advertising and order acceptance.
Book Synopsis Joint Inventory and Fulfillment Decisions for Omnichannel Retail Networks by : Aravind Govindarajan
Download or read book Joint Inventory and Fulfillment Decisions for Omnichannel Retail Networks written by Aravind Govindarajan and published by . This book was released on 2019 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: With e-commerce growing at a rapid pace compared to traditional retail, many brick-and-mortar firms are supporting their online growth through an integrated omnichannel approach. Such integration can lead to reduction in cost that can be achieved through efficient inventory management. A retailer with a network of physical stores and fulfillment centers facing two demands (online and in-store) has to make important, interlinked decisions - how much inventory to keep at each location and where to fulfill each online order from, as online demand can be fulfilled from any location. We consider order-up-to policies for a general multi-period model with multiple locations and zero lead time, and online orders fulfilled multiple times in each period. We first focus on the case where fulfillment decisions are made at the end of each period, which allows separate focus on the inventory decision. We develop a simple, scalable heuristic for the multi-location problem based on analysis from the two-store case, and prove its asymptotic near-optimality for large number of omnichannel stores under certain conditions. We extend this to the case where fulfillment is done multiple times within a period and combine it with a simple, threshold-based fulfillment policy which reserves inventory at stores for future in-store demand. With the help of a realistic numerical study based on a fictitious retail network embedded in mainland USA, we show that the combined heuristic outperforms a myopic, decentralized planning strategy under a variety of problem parameters, especially when there is an adequate mix of online and in-store demands. Extensions to positive lead times are discussed.
Book Synopsis New Metaheuristic Schemes: Mechanisms and Applications by : Erik Cuevas
Download or read book New Metaheuristic Schemes: Mechanisms and Applications written by Erik Cuevas and published by Springer Nature. This book was released on 2023-12-08 with total page 280 pages. Available in PDF, EPUB and Kindle. Book excerpt: Recently, novel metaheuristic techniques have emerged in response to the limitations of conventional approaches, leading to enhanced outcomes. These new methods introduce interesting mechanisms and innovative collaborative strategies that facilitate the efficient exploration and exploitation of extensive search spaces characterized by numerous dimensions. The objective of this book is to present advancements that discuss novel alternative metaheuristic developments that have demonstrated their effectiveness in tackling various complex problems. This book encompasses a variety of emerging metaheuristic methods and their practical applications. The content is presented from a teaching perspective, making it particularly suitable for undergraduate and postgraduate students in fields such as science, electrical engineering, and computational mathematics. The book aligns well with courses in artificial intelligence, electrical engineering, and evolutionary computation. Furthermore, the material offers valuable insights to researchers within the metaheuristic and engineering communities. Similarly, engineering practitioners unfamiliar with metaheuristic computation concepts will recognize the pragmatic value of the discussed techniques. These methods transcend mere theoretical tools that have been adapted to effectively address the significant real-world problems commonly encountered in engineering domains.
Book Synopsis Multi-Item Online Order Fulfillment by : Yanyang Zhao
Download or read book Multi-Item Online Order Fulfillment written by Yanyang Zhao and published by . This book was released on 2020 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt: The boom of e-commerce in the globe in recent years has expedited the expansion of fulfillment infrastructures by e-retailers. While e-retailers are building more warehouses to offer faster delivery service than ever, the associated fulfillment costs have skyrocketed over the past decade. In this paper, we study the problem of minimizing fulfillment costs, in which an e-retailer must decide which warehouse(s) to fulfill each order from, subject to warehouses' inventory constraints. The e-retailer can split an order, at an additional cost, and fulfill it from different warehouses. It is notoriously challenging to make effective real-time fulfillment decisions at the occurrence of order split, which has become a major problem for e-retailers.We focus on a two-layer distribution network that has been implemented in practice by major e-retailers. We analyze the performance of fulfillment policies that do not rely on demand forecasts. We show that, under an assumption that aligns with the practice of most e-retailers, a myopic policy achieves a constant performance ratio compared to an optimal clairvoyant algorithm. We further show that this ratio is tight. More generally, we characterize the performance guarantees of the myopic policy in terms of the cost parameters of the model. Finally, we complement our theoretical results by conducting a numerical study and demonstrate the good performance of the myopic policy.
Book Synopsis Empirical Studies in Online Retail Operations and Dynamic Pricing by : Jiaqi Xu
Download or read book Empirical Studies in Online Retail Operations and Dynamic Pricing written by Jiaqi Xu and published by . This book was released on 2016 with total page 254 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation studies empirical problems in retail operations management and dynamic pricing through three essays. The first essay studies the financial impact of offering faster delivery in online retail. Using econometric policy analysis framework, we study a quasi-experimental setting in which a group of U.S. customers for a large apparel retailer experienced a reduction in delivery time due to the opening of a new distribution center (DC). We show that faster delivery increased sales growth by 0.58% per week following the opening of the new DC, with the effect varying inversely with respect to distance from the new DC. The second essay studies the design of free shipping threshold policy in online retail using transaction data from a major online apparel retailer. We develop models of customer demand and product return behavior that are consistent with empirical data to determine the optimal level of free shipping threshold. In particular, we incorporate a behavior called order padding, in which customers deliberately inflate their orders to qualify for free shipping, and its effect on product return. We analyze the model to show that a free shipping threshold policy is most effective when the retailer faces high product margin, low shipping revenue, low product return probability, and when order padding does not cause customers to delay future purchase. The third essay studies practical issues in large-scale multiproduct dynamic pricing. We partner with a Major League Baseball (MLB) franchise to develop a demand model for its single-game tickets. The demand model is then used to evaluate the effectiveness of dynamic pricing policies. The demand model indicates that due to various practical constraints in pricing, the franchise was unable to benefit from the use of dynamic pricing. We address these issues and use simulation to show that revenue improvement of up to 15% can be achieved through the effective use of dynamic pricing. We also show that a properly calibrated fixed pricing policy based on a detailed demand model can achieve similar levels of revenue improvement as the optimal dynamic pricing policy.
Book Synopsis The Oxford Handbook of Pricing Management by : Özalp Özer
Download or read book The Oxford Handbook of Pricing Management written by Özalp Özer and published by OUP Oxford. This book was released on 2012-06-07 with total page 976 pages. Available in PDF, EPUB and Kindle. Book excerpt: The Oxford Handbook of Pricing Management is a comprehensive guide to the theory and practice of pricing across industries, environments, and methodologies. The Handbook illustrates the wide variety of pricing approaches that are used in different industries. It also covers the diverse range of methodologies that are needed to support pricing decisions across these different industries. It includes more than 30 chapters written by pricing leaders from industry, consulting, and academia. It explains how pricing is actually performed in a range of industries, from airlines and internet advertising to electric power and health care. The volume covers the fundamental principles of pricing, such as price theory in economics, models of consumer demand, game theory, and behavioural issues in pricing, as well as specific pricing tactics such as customized pricing, nonlinear pricing, dynamic pricing, sales promotions, markdown management, revenue management, and auction pricing. In addition, there are articles on the key issues involved in structuring and managing a pricing organization, setting a global pricing strategy, and pricing in business-to-business settings.
Book Synopsis Advances in E-Business Engineering for Ubiquitous Computing by : Kuo-Ming Chao
Download or read book Advances in E-Business Engineering for Ubiquitous Computing written by Kuo-Ming Chao and published by Springer Nature. This book was released on 2019-11-27 with total page 633 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book presents the latest trends in scientific methods and enabling technologies to advance e-business. It consists of selected high-quality papers from the 16th International Conference on E-Business Engineering (ICEBE 2019), held in Shanghai, China, on 11–13 October 2019. ICEBE is a leading international forum for researchers, engineers, and business specialists to exchange cutting-edge ideas, findings, and experiences in the field of e-business. The book covers a range of topics, including agents for e-business, big data for e-business, Internet of Things, mobile and autonomous computing, security/privacy/trust, service-oriented and cloud computing, software engineering, blockchain, and industry applications.
Book Synopsis Operations in an Omnichannel World by : Santiago Gallino
Download or read book Operations in an Omnichannel World written by Santiago Gallino and published by Springer Nature. This book was released on 2019-10-15 with total page 353 pages. Available in PDF, EPUB and Kindle. Book excerpt: The world of retailing has changed dramatically in the past decade. Sales originating at online channels have been steadily increasing, and even for sales transacted at brick-and-mortar channels, a much larger fraction of sales is affected by online channels in different touch points during the customer journey. Shopper behavior and expectations have been evolving along with the growth of digital channels, challenging retailers to redesign their fulfillment and execution processes, to better serve their customers. This edited book examines the challenges and opportunities arising from the shift towards omni- channel retail. We examine these issues through the lenses of operations management, emphasizing the supply chain transformations associated with fulfilling an omni-channel demand. The book is divided into three parts. In the first part, “Omni-channel business models”, we present four studies that explore how retailers are adjusting their fundamental business models to the new omni-channel landscape. The second part, “Data-driven decisions in an omni-channel world”, includes five chapters that study the evolving data opportunities enabled by omni-channel retail and present specific examples of data-driven analyses. Finally, in the third part, “Case studies in Omni-channel retailing”, we include four studies that provide a deep dive into how specific industries, companies and markets are navigating the omni-channel world. Ultimately, this book introduces the reader to the fundamentals of operations in an omni-channel context and highlights the different innovative research ideas on the topic using a variety of methodologies.
Book Synopsis Data-Driven Dynamic Pricing and Inventory Management of an Omni-Channel Retailer in an Uncertain Demand Environment by : Shiyu Liu
Download or read book Data-Driven Dynamic Pricing and Inventory Management of an Omni-Channel Retailer in an Uncertain Demand Environment written by Shiyu Liu and published by . This book was released on 2023 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: In recent years, omni-channel retailing has become immensely popular among both retailers and consumers. In this approach, retailers often leverage their brick-and-mortar stores to fulfill online orders, leading to the need for simultaneous decision-making on replenishment and inventory rationing. This inventory strategy presents significant complexities in traditional dynamic pricing and inventory management problems, particularly in unpredictable market environments. Therefore, we have developed a dynamic pricing, replenishment, and rationing model for omni-channel retailers using a two-level partially observed Markov decision process to visualize the dynamic process. We design a deep reinforcement learning algorithm, called Maskable LSTM-Proximal Policy Optimization (ML-PPO), which integrates the current observations and future predictions as input to the agent and uses the invalid action mask to guarantee the allowable actions. Our simulation experiments have demonstrated the ML-PPO's efficiency in maximizing retailer profit and service level, along with its generalized ability to tackle dynamic pricing and inventory management problems.
Book Synopsis Revenue Management Through Dynamic Cross-Selling in E-Commerce Retailing by : Serguei Netessine
Download or read book Revenue Management Through Dynamic Cross-Selling in E-Commerce Retailing written by Serguei Netessine and published by . This book was released on 2014 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: We consider the problem of dynamically cross-selling products (e.g., books) or services (e.g., travel reservations) in the e-commerce setting. In particular, we look at a company that faces a stream of stochastic customer arrivals and may offer each customer a choice between the requested product and a package containing the requested product as well as another product, packaging complement. Given consumer preferences and product inventories, two issues are analyzed: (1) how to select packaging complements and (2) how to price product packages to maximize profits. We formulate the cross-selling problem as a stochastic dynamic program blended with combinatorial optimization. We demonstrate the state-dependent and dynamic nature of the optimal package selection problem and derive structural properties of the dynamic pricing problem. In particular, we focus on two practical business settings: with (the Emergency Replenishment model) and without (the Lost Sales model) the possibility of inventory replenishment in the case of a product stock-out. For the Emergency Replenishment model, we establish that the problem is separable in the initial inventory of all products and hence the dimensionality of the dynamic program can be significantly reduced. For both models several packaging/pricing heuristics are suggested and their effectiveness is tested numerically.
Book Synopsis Approximate Dynamic Programming for Dynamic Vehicle Routing by : Marlin Wolf Ulmer
Download or read book Approximate Dynamic Programming for Dynamic Vehicle Routing written by Marlin Wolf Ulmer and published by Springer. This book was released on 2017-04-19 with total page 209 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book provides a straightforward overview for every researcher interested in stochastic dynamic vehicle routing problems (SDVRPs). The book is written for both the applied researcher looking for suitable solution approaches for particular problems as well as for the theoretical researcher looking for effective and efficient methods of stochastic dynamic optimization and approximate dynamic programming (ADP). To this end, the book contains two parts. In the first part, the general methodology required for modeling and approaching SDVRPs is presented. It presents adapted and new, general anticipatory methods of ADP tailored to the needs of dynamic vehicle routing. Since stochastic dynamic optimization is often complex and may not always be intuitive on first glance, the author accompanies the ADP-methodology with illustrative examples from the field of SDVRPs. The second part of this book then depicts the application of the theory to a specific SDVRP. The process starts from the real-world application. The author describes a SDVRP with stochastic customer requests often addressed in the literature, and then shows in detail how this problem can be modeled as a Markov decision process and presents several anticipatory solution approaches based on ADP. In an extensive computational study, he shows the advantages of the presented approaches compared to conventional heuristics. To allow deep insights in the functionality of ADP, he presents a comprehensive analysis of the ADP approaches.
Book Synopsis Order Fulfillment Algorithms for Online Retail by : Pin-Yi Chen
Download or read book Order Fulfillment Algorithms for Online Retail written by Pin-Yi Chen and published by . This book was released on 2023 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: We study an order fulfillment problem in an online-retail setting where the retailer's fulfillment system includes warehouses that hold inventory (fulfillment centers), and a transportation network composed of node facilities and transportation arcs. To minimize the total transportation costs for order fulfillment, the online retailer should plan its transportation capacities properly in advance and execute according to the transportation plan by making smart fulfillment decisions. To fulfill a customer order, the online retailer must decide from where to source the inventory needed for the order, as well as how to route the order to the customer to satisfy a delivery time commitment. In this research we focus on the latter decision, namely choosing the route for each order. The online retailer has full control of its transportation system in both planning and execution; in addition, the online retailer can rely on third party carriers to transport some of its orders. We design an order fulfillment algorithm that makes immediate routing decisions for incoming orders. To determine the route to assign to an order, we compare the costs of all feasible routes. For routes that use retailer-controlled resources, we need to account for the opportunity costs associated with these resources. We propose to do this with the dual values from a transportation quadratic program, which tries to account for the uncertainty of the network flows to estimate the opportunity costs of depleting resources in the transportation network. The dual values are updated periodically with the most updated system states that include resource capacities and demand forecasts. We numerically test our algorithm on a realistic network with inputs inspired by the actual data from our industry collaborator. We compare our algorithm with several benchmark algorithms, including a LP-based algorithm that mimics the algorithm in the retailer's current operating system. The experiments show a 50% reduction in the mean percentage difference in shipping cost from the hindsight solution as compared to the LP-based algorithm. In addition to the fulfillment algorithm, we formulate a capacity planning problem that determines the optimal level of transportation resources in the network for a given demand forecast. When the demand deviates from the planned capacity by a lot, adding or removing planned resources becomes a crucial cost-saving mechanism. Motivated by this, we propose ad hoc truck controllers that make online capacity modification decisions and test it with small examples.
Book Synopsis Dynamic Pricing With Infrequent Inventory Replenishments by : Boxiao Chen
Download or read book Dynamic Pricing With Infrequent Inventory Replenishments written by Boxiao Chen and published by . This book was released on 2022 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: We consider a joint pricing and inventory control problem where pricing can be adjusted more frequently, such as every period, than inventory ordering decisions, which are made every epoch that consists of multiple periods. This is motivated by many examples, especially for online retailers, where price is indeed much easier to change than inventory level, because changing the latter is subject to logistic and capacity constraints. In this setting, the retailer determines the inventory level at the beginning of each epoch and solves a dynamic pricing problem within each epoch with no further replenishment opportunities. The optimal pricing and inventory control policy is characterized by an intricate dynamic programming (DP) solution. We consider the situation where the demand-price function and the distribution of random demand noise are both unknown to the retailer, and the retailer needs to develop an online learning algorithm to learn those information and at the same time maximize total profit. We propose a learning algorithm based on least squares estimation and construction of an empirical noise distribution under a UCB framework and prove that the algorithm converges through the DP recursions to approach the optimal pricing and inventory control policy under complete demand information. The theoretical lower bound for convergence rate of a learning algorithm is proved based on the multivariate Van Trees inequality coupled with some structural DP analyses, and we show that the upper bound of our algorithm's convergence rate matches the theoretical lower bound.
Book Synopsis Opportunistic Returns and Dynamic Pricing by : Chaitnaya Bandi
Download or read book Opportunistic Returns and Dynamic Pricing written by Chaitnaya Bandi and published by . This book was released on 2018 with total page 47 pages. Available in PDF, EPUB and Kindle. Book excerpt: We investigate how dynamic pricing can lead to more product returns in the online retail industry. Using detailed sales data of more than two million transactions from the Indian online retail market, where price promotions are very common, we document two types of strategic customer behavior that have not been considered in previous research. First, customers who monitor product prices after purchase may initiate opportunistic returns because of price drops. Second, customers who anticipate a future return may strategically choose a payment method that facilitates product returns. Our logistic regression models indicate that (1) realized post-purchase price drops lead to a higher probability of return, and (2) anticipated price drops after purchase lead to a higher probability of using cash on delivery, a payment method with a lower return cost for consumers. Our findings are robust to alternative model specifications and sample selection procedures. We demonstrate that an optimal pricing policy should take into consideration the potential costs of two types of strategic customer behavior: opportunistic returns and strategic choice of payment method.
Book Synopsis Dynamic Pricing in a Distribution Channel in the Presence of Switching Costs by : Koray Cosguner
Download or read book Dynamic Pricing in a Distribution Channel in the Presence of Switching Costs written by Koray Cosguner and published by . This book was released on 2017 with total page 47 pages. Available in PDF, EPUB and Kindle. Book excerpt: We advance the literature on dynamic oligopoly pricing models in the presence of switching costs by additionally modeling the strategic pricing role of the retailer within the distribution channel. In doing this, we study the relative dynamic pricing implications of how current retail and wholesale prices for a brand must optimally take into account past and future demand, respectively, for the brand. Using scanner data from the cola market, we find that while the retailer exploits the benefit of inertial demand by appropriately increasing the retail profit margin, the cost of investing is borne entirely by the manufacturers. We use simulation studies to show how the retailer will lose its ability to leverage the benefits of inertial demand as consumers become more price sensitive. We also show that when inertia of the more price-sensitive customer segment increases, the aggregate welfare of consumers, the retailer, and manufacturers may increase.
