Mahsa Mahboob Ghodsi – HEC Montréal, Canada
Faster delivery, lower shipping costs, and a higher chance of in-stock product, are some of the benefits of an omnichannel business model. Assuming that ordering can only be made before the start of the selling season, we address two questions that are crucial for the success of pooling inventories. First, what are the optimal order quantity decision of each channel, i.e., the brick-and-mortar store and the online channel, under different omnichannel fulfillment strategies. Second, who should get the sales credit? To answer these questions, we propose a noncooperative game theory approach and characterize the equilibrium order quantities in four scenarios, that is, no-cross fulfillment of customer's demand, ship-to-store, ship-from-store, and hybrid fulfillment. We compare the equilibrium strategies and outcomes, and obtain, among other things, that a hybrid implementation leads to higher collective and individual outcomes. Considering various sales credit allocation rules, we provide insights on the best practice for each fulfillment strategy, taking into account customers' shopping preferences.
(with G. Zaccour)