Supply chain organization and e-commerce: a model to analyze store-picking, warehouse-picking and drop-shipping

Across many industries, e-commerce generates substantial modifications in supply chain structures. The aim of this article is to assess different forms of existing organizations when a store-based sales network coexists with a web site order network. Three main organizational models can be detected: “store-picking”, “dedicated warehouse-picking” and “drop-shipping”. We use a “newsboy” order policy model to compare the advantages of these different models and to note the impact of some parameters on inventory and flow management policies throughout the supply chain. Several effects are presented, particularly those linked to the size of the Internet market in relation to traditional market size and market demand hazards.

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