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Internet Book Retailing and Supply Chain Management: An Analytical Study of Inventory Location Speculation and Postponement

Logistics and Transportation Review, Vol. 41, No. 3, pp. 159-177, 2005

Posted: 5 Dec 2006  

Joseph Bailey

University of Maryland

Elliot Rabinovich

Arizona State University - W.P. Carey School of Business

Abstract

Internet retailing models support supply chains where consumer order locations are decoupled from inventory locations. In this setting, retailers dynamically consider inventory location speculation and postponement to fulfill their orders. Particularly, retailers can manage inventory to fulfill orders through two opposing strategies: in-stock inventory and drop-shipping. This paper extends the supply chain management literature by modeling Internet retailers' decisions to balance their offerings between these two strategies. The results show how retailers depend more on both of these strategies as their market share and product popularity increase. Thus, both inventory management strategies may be considered simultaneously to better manage Internet retailers' inventory.

Keywords: Inventory management, Electronic commerce, Postponement

Suggested Citation

Bailey, Joseph and Rabinovich, Elliot, Internet Book Retailing and Supply Chain Management: An Analytical Study of Inventory Location Speculation and Postponement. Available at SSRN: https://ssrn.com/abstract=948801

Joseph Bailey

University of Maryland

College Park
College Park, MD 20742
United States

Elliot Rabinovich (Contact Author)

Arizona State University - W.P. Carey School of Business ( email )

Tempe, AZ 85287-3706
United States

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