Inventory and Commitment Decisions for On-Demand Warehousing System
Abstract
The on-demand warehousing system is a service that makes a connection between e-commerce sellers and warehouse providers who have excess capacity for sharing warehouse spaces. The e-commerce sellers can create a distribution network strategy and manage the varying demands of customers by utilizing this system. In this study, we focused on inventory and commitment decisions that impacted the use of shared warehouses from the standpoint of e-commerce sellers. We proposed a mathematical model, which incorporated inventory and commitment decisions to maximize total profits. A small-scale experiment was conducted, and the result showed that the commitment decisions could affect total profits of e-commerce sellers considerably.