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Centralizing slow-moving items in a retail network: a case study

Research output: Contribution in Book/Report/Proceedings - With ISBN/ISSNConference contribution/Paperpeer-review

Published
Publication date2014
Host publicationProceedings of the 4th International Conference on Industrial Engineering and Operations Management (IEOM) - Bali, Indonesia January 7-9 2014
PublisherIEOM
Pages899-908
Number of pages10
ISBN (print)9780985549718
<mark>Original language</mark>English
Event4th International Conference on Industrial Engineering and Operations Management (IEOM) - Bali, Indonesia
Duration: 6/01/2014 → …

Conference

Conference4th International Conference on Industrial Engineering and Operations Management (IEOM)
Country/TerritoryIndonesia
CityBali
Period6/01/14 → …

Conference

Conference4th International Conference on Industrial Engineering and Operations Management (IEOM)
Country/TerritoryIndonesia
CityBali
Period6/01/14 → …

Abstract

The subject of the study is a Singapore-based third-party logistics provider (3PL) that manages a network of retail stores on behalf of a public sector client. The network currently stocks a large number of slow-moving items (SMI) at store-level, which leads to significant working capital tied-down on inventory. This paper studies into and quantifies the effectiveness of a proposed approach to centralize the retail network’s inventory of slow-moving items to a pooling point. Results from the analysis show that under the base scenario with just 5% of items (by unit sales volume) stocked centrally, the aggregation of demand across retail outlets can contribute to a net 27.3% reduction in fulfillment costs. Furthermore, a selective centralization strategy can also be designed to be quite robust (i.e. costs would be close to optimum) within a broad range of SMI definitions.