How Do Delivery Variety Decisions Contribute to Sales? An Empirical Study on Demand and Supply Integration

Decision Sciences, Forthcoming

42 Pages Posted: 16 Nov 2017

See all articles by Xiang Wan

Xiang Wan

Ohio State University (OSU) - Department of Marketing and Logistics

Martin E. Dresner

University of Maryland

Philip Evers

University of Maryland

Date Written: November 14, 2017

Abstract

This study empirically assesses the value of decisions on offering delivery variety (the number of different methods of truck transport used to deliver products to buyers). Rooted in the literature on demand and supply integration, we develop the relationship between delivery variety decisions and sales through the mediating role of unit fill rate. We find that a decision to increase delivery variety will indirectly improve sales through the mediating role of the fill rate. Furthermore, our results suggest that decisions on order variety (the number of ordering methods offered to buyers) moderates this mediation effect. A decision to increase order variety enhances the benefits of delivery variety. We estimate our models using archival data of 14,908 distribution center-week observations including deliveries, order fulfillment, sales records, and other operational data over three years. When the number of delivery methods increases from 1 to 3, fill rates increase by 1.22% and sales increase by 15.39%, and when the number of order methods increases from 1 to 4, the impact of delivery variety on fill rates increases by an additional 0.39% and on sales by an additional 4.68%. These findings provide empirical support for the integration of demand and supply associated with decision making in supply chains and underscore the need for top management to consider the complementary benefits of delivery variety and order variety on order fulfillment and sales.

Keywords: Logistics Flexibility; Delivery Variety; Sales; Moderated Mediation

Suggested Citation

Wan, Xiang and Dresner, Martin E. and Evers, Philip, How Do Delivery Variety Decisions Contribute to Sales? An Empirical Study on Demand and Supply Integration (November 14, 2017). Decision Sciences, Forthcoming. Available at SSRN: https://ssrn.com/abstract=3071164

Xiang Wan (Contact Author)

Ohio State University (OSU) - Department of Marketing and Logistics ( email )

Fisher Hall 524
2100 Neil Ave
Columbus, OH 43210
United States

Martin E. Dresner

University of Maryland ( email )

College Park
College Park, MD 20742
United States

Philip Evers

University of Maryland ( email )

College Park
College Park, MD 20742
United States

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