Abstract
In practice, the managers in retailing usually make their decisions independently when they work for different stages of the distribution and lateral transshipment operations. Without using an integrated approach, the managers suffer the problems of incurring higher costs in their operations and losing opportunities to generate more profit from selling seasonal products. Therefore, we were motivated to present an integrated approach for the distribution and lateral transshipment operations of seasonal products in retailing in this study. In the proposed approach, we divide the distribution and lateral transshipment operations of seasonal products into three stages. Our goal is to minimize the total costs incurred in the whole selling period of the seasonal product. In the first stage, we propose a newsboy model to determine the optimal one-time-only order quantities of the seasonal products for the managers in the warehouse. Then, we use clustering analysis in the second stage to categorize seasonal products into groups, and establish an optimal control policy for seasonal products in the same group that helps retailers to replenish each seasonal product from the warehouse to meet customers’ demand. Finally, when the warehouse runs out of its inventory, we formulate a mathematic model in the third stage to determine the optimal transshipment quantities among all of the retailers to minimize the expected total costs incurred for the rest of the selling period. By using a household product company in Taiwan as our case study, we demonstrate how to implement our approaches in the three stages. Also, based on the real-world data of 17 seasonal products, we show that the proposed integrated distribution and lateral transshipment approach significantly outperforms the current decision-making approaches of the company in our case study. Therefore, our proposed integrated approach shall serve as an effective decision support tool for distribution and lateral transshipment operations of seasonal products in retailing.