Ordering and inventory reallocation decisions in a shared inventory platform with demand information sharing
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Ordering and inventory reallocation decisions in a shared inventory platform with demand information sharing Qi Xu1 · Zhong-miao Sun1
· Xiao-qing Gao1
Accepted: 15 September 2020 © Springer Science+Business Media, LLC, part of Springer Nature 2020
Abstract In this paper, we study the optimal ordering and inventory reallocation of the inventory service platform under the retailer demand information sharing. Due to the uncertainty of market demand, retailers’ demand information is likely to be inaccurate or even false. In this regard, retailers can reduce demand uncertainty by screening market signals. Therefore, based on the sharing of mean demand information and market signals, we explored the platform’s optimal ordering and inventory reallocation strategies, analyzed the retailer’s motivation for sharing false demand information, and proposed a corresponding penalty coordination mechanism. Our results show that the sharing of demand information and screening market signals reduces the uncertainty of market demand, thereby improving the accuracy of orders and increasing profit of the system. On the other hand, we find that the inventory reallocation strategy of the platform is affected by uncertain market information, but has nothing to do with the actual average demand and market signals shared by retailers. In this way, retailers will only share real information when the sharing system meets certain key conditions, otherwise they may share false demand information. The proposed punishment mechanism can encourage retailers to share their actual demand information with the platform. Keywords Stochastic demand · Market signal · Fake information sharing · Penalty mechanism
1 Introduction With the rapid development of information technologies and the internet, the emerging business mode represented by sharing economy has risen. For example, Uber and Lyft for transportation services, Instacart and Postmates for home deliveries, and TaskRabbit and Handy for household tasks (Benjaafar and Hu 2019). Under this background, the shared inventory of the retail industry has come into being and has been adopted by some famous enterprises. For example, Amazon adopts two methods of inventory sharing, the European Fulfilment Network (EFN) and Pan-European, which can distribute the goods stored in one country to other countries (Amz 2020). In China, the e-commerce giant JD has announced
B 1
Zhong-miao Sun [email protected] Glorious Sun School of Business and Management, Donghua University, Shanghai, China
123
Annals of Operations Research
an inventory sharing scheme with American retailer Wal–Mart in 2017. The cooperation scheme will allow Wal–Mart stores to serve as warehouses for JD in major Chinese cities. JD’s system will be able to automatically check whether the goods that customers ordered are available at the nearest Wal–Mart store. Upon getting an order, JD dispatches the express deliverer closest to any Walmart store so that the courier can deliver the goods to the customer at the earliest time possible (Sohu 20
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