Omni-Channel Distribution: A Transshipment Modeling Perspective

Abstract

In our work, we develop a specialized optimization technique that adapts the general linear programming Transshipment model to the ever-growing needs of Omni-Channel distribution in Supply Chain Management. With the rapid adoption of “smart” mobile technologies, customers now acquire merchandise across multiple channels and devices. As a result, retailers are challenged with downstream operational complexities. Fulfillment of customer orders now changes the placement and amount of independent demand inventory organizations may hold. Our research integrates the use of Hub or Fulfillment Centers, locations where sellers fill customer orders placed through e-commerce, as an additional segment of demand. This adaptation to the optimization of Transshipment can result in significant benefits to the firm’s logistics presence, customer retention, and profit.