An Empirical Analysis of Sell-through in a Fashion Setting

Sell-through is a widely used performance metric in retail supply chains, but limited empirical research exists about its validity for that purpose, given its dependence on many different variables. This study analyses to what extent sell-through is influenced by fixed store attributes (e.g. store size), and what impact on this metric operational management decisions (e.g. replenishment) have. Using data collected from a fashion retailer, a sales model was developed to estimate the statistical contribution of the different types of impacts to sell-through. Results of the study provided strong empirical evidence that fixed store attributes such as store size can impact significantly sell-through levels. Operational management decisions also have a statistically significant impact on sell-through, but to a much smaller extent. This makes sell-through more valuable for compare performance when fixed store attributes are not differential

Aplicación de modelos de inventarios en una cadena de abastecimiento de productos de consumo masivo con una bodega y N puntos de venta.

Uno de los problemas más complejos que afectan las empresas industriales y comerciales locales es la administración y control de los inventarios. Es muy frecuente escuchar el problema del desbalanceo de inventarios: "¿Por qué será que siempre se tiene mucho de lo que casi no se vende y hay faltantes de lo que sí rota?" En este artículo se abordarán las causas de este problema y sus posibles soluciones, especialmente en cadenas de suministro con una bodega y múltiples puntos de venta (OneWarehouse NRetailer Problem). Se discutirán diversas técnicas de control de inventarios para este sistema, concentrándose también en sus aspectos logísticos generales, ilustrando con la aplicación real en una empresa comercializadora de productos de consumo masivo. Los impresionantes resultados obtenidos evidencian un excelente potencial de aplicación de estos modelos en empresas comerciales o industriales interesadas en basar sus procesos de toma de decisiones en la investigación de operaciones. Estos resultados motivan el continuo desarrollo de proyectos de investigación aplicada en las organizaciones de la región

Inventory Management of a Fast-Fashion Retail Network

Working in collaboration with Spain-based retailer Zara, we address the problem of dis- tributing over time a limited amount of inventory across all the stores in a fast-fashion retail network. Challenges speci¯c to that environment include very short product life-cycles, and store policies whereby a reference is removed from display whenever one of its key sizes stocks out. We ¯rst formulate and analyze a stochastic model predicting the sales of a reference in a single store during a replenishment period as a function of demand forecasts, the inventory of each size initially available and the store inventory management policy just stated. Secondly, we formulate a mixed-integer program embedding a piece-wise linear approximation of the ¯rst model applied to every store in the network and allowing to compute store shipment quantities maximizing overall predicted sales, subject to inventory availability and other constraints. We report the implementation of this optimization model by Zara to support its inventory distribu- tion process, and the ensuing controlled ¯eld experiment performed to assess the impact of that model relative to the prior procedure used to determine weekly shipment quantities. The results of that experiment suggest that the new allocation process tested increases sales, reduces tran- shipments, and increases the proportion of time that an important category of Zara's products spends on display

Heuristic Methods for Centralized Control of One-Warehouse, N-Retailer Inventory Systems

This paper considers a periodic-review, two-echelon inventory system with one central warehouse and several retailers facing stochastic demand. The retailers replenish their stock from the warehouse, which in turn places orders at an outside supplier with infinite capacity. Transportation times and costs are constant. No ordering costs are considered, but warehouse replenishments must be multiples of a given batch quantity. The objective is to find policies that minimize holding and backorder costs. The standard approach to approximately solve this problem is to use a "balance" assumption, meaning that negative stock allocations to the retailers are possible. This approach may lead to considerable errors for problems with large differences between the retailers in terms of service requirements and demand characteristics. To handle such situations we suggest and evaluate two computationally tractable heuristics: the Virtual Assignment ordering rule for warehouse replenishments and the Two-step Allocation rule for allocating stock from the warehouse to the retailers. Numerical evidence shows that, especially when combining these heuristics, we obtain considerable improvements for many problems over the standard approach. Savings of up to 50% have been recorded.Supply Chain Inventories, Stochastic Demand, Ordering And Allocation

Optimized supply routing at Dell under non-stationary demand

Thesis (S.M.)--Massachusetts Institute of Technology, Sloan School of Management, Operations Research Center, 2008.Includes bibliographical references (p. 79-80).This thesis describes the design and implementation of an optimization model to manage inventory at Dell's American factories. Specifically, the model is a mixed integer program which makes routing decisions on incoming monitors (a bulky item which incurs great shipping costs) from Asia to Dell's factories in America as well as inventory transfer decisions from factory to factory. The optimization model approaches the inventory allocation problem by minimizing inventory routing costs plus shortage costs across all sites subject to constraints which define the specifics of Dell's supply chain. Shortage costs are assessed using a per part per day back order penalty, however a more precise assessment of shortage costs using actual costs from a combined MIT/Dell study is also presented. The software implementation of the optimization model has been field tested and validated and is now being adopted on a global level for use in balancing supply to all of Dell's factories worldwide. The software design as well as the implementation results are discussed within this thesis. Also, an adaptation of the model to a global scale is presented. This extension of the model, which assumes a "global warehouse" upstream in the supply chain, allocates inventory from the China to regional facilities throughout the world subject to supply chain constraints and the understanding that regional teams will tend to balance out their own region's inventory using intraregional balancing decisions.by John William Foreman.S.M

Modelo de gestão da distribuição na indústria do calçado : estudo de caso

Dissertação de mestrado integrado em Engenharia e Gestão IndustrialA indústria da moda tem evoluído ao longo dos tempos, assim como as exigências do consumidor. Outrora os consumidores apenas exigiam produtos com qualidade e preço aceitáveis. Agora, para além destas exigências, exigem também: design, um produto na “moda”, que siga as tendências e disponibilidade do produto. Surge, então, a necessidade de otimizar os processos das cadeias de abastecimento, nomeadamente na área do retalho do vestuário e calçado. Este trabalho é um estudo de caso na empresa Foreva – Comércio de calçado S.A., e tem como principais objetivos caracterizar o atual sistema de distribuição identificando os seus principais problemas; identificar fatores que caracterizam cada ponto de venda, permitindo a definição de um perfil associado a cada ponto de venda; desenvolver um modelo que incorpore a informação dos perfis anteriormente referidos, e permita definir a melhor estratégia de abastecimento a cada loja. Foram identificados vários problemas nos processos do sistema de distribuição da empresa e foram propostas soluções para minimizar os mesmos. Para isso foram analisados dados da empresa para definir a informação presente nos perfis de loja, e a partir desta informação foram elaborados, a título de exemplo, perfis de quatro lojas da empresa. Posteriormente foram desenvolvidos dois modelos, um de programação linear e outro baseado no modelo da fair allocation de modo a melhorar o processo de reabastecimento das lojas. As ferramentas utilizadas neste trabalho foram o SPSS, assim como, o Excel e o seu pacote Solver.The fashion industry has evolved over time, as well as consumer demand. Once, consumers demanded only products with acceptable quality and price. Now, in addition to these requirements, also require: design, a fashion product, a product which follow the trends and product availability. Then it comes the need to optimize the processes of footwear supply chains. This paper is a case study, where the company under study is Foreva – Comércio de Calçado SA, and its main goals are: to characterize the current distribution system and identify their main problems; to identify factors that characterize each store, allowing the definition of a profile associated with each store; and to develop a model that incorporates information from the profiles, mentioned above, and allow the definition of the best strategy to supply each store. It were identified several problems in the processes of the company's distribution system and proposed solutions to minimize them. For that, company data was analyzed for determine what information should be present in the store profiles, and with this information store profiles were developed for four company stores. Later it were developed two models, a linear programming model and another based on the fair allocation approach to define the best supply strategy for a particular store. The tools used in this study were SPSS, as well as the Excel and its pack Solver