Retail Supply Chain Management: Quantitative Models and Empirical Studies

454 Pages·2015·5.3 MB·English

by  Narendra Agrawal

International Series in
Operations Research & Management Science
Narendra Agrawal
Stephen A. Smith Editors
Retail
Supply Chain
Management
Quantitative Models and Empirical
Studies
Second Edition
International Series in Operations Research
& Management Science
Volume 223
Series Editor
Camille C. Price
Stephen F. Austin State University, TX, USA
Associate Series Editor
Joe Zhu
Worcester Polytechnic Institute, MA, USA
Founding Series Editor
Frederick S. Hillier
Stanford University, CA, USA
More information about this series at http://www.springer.com/series/6161

Narendra Agrawal (cid:129) Stephen A. Smith
Editors
Retail Supply Chain
Management
Quantitative Models and Empirical Studies
Second Edition
Editors
NarendraAgrawal StephenA.Smith
DepartmentofOperationsManagement DepartmentofOperationsManagement
andInformationSystems andInformationSystems
LeaveySchoolofBusiness LeaveySchoolofBusiness
SantaClaraUniversity SantaClaraUniversity
SantaClara,CA,USA SantaClara,CA,USA
ISSN0884-8289 ISSN2214-7934 (electronic)
InternationalSeriesinOperationsResearch&ManagementScience
ISBN978-1-4899-7561-4 ISBN978-1-4899-7562-1 (eBook)
DOI10.1007/978-1-4899-7562-1
LibraryofCongressControlNumber:2015934150
SpringerNewYorkHeidelbergDordrechtLondon
©SpringerScience+BusinessMediaNewYork2009,2015
Thisworkissubjecttocopyright.AllrightsarereservedbythePublisher,whetherthewholeorpartof
the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations,
recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission
or information storage and retrieval, electronic adaptation, computer software, or by similar or
dissimilarmethodologynowknownorhereafterdeveloped.
The use of general descriptive names, registered names, trademarks, service marks, etc. in this
publicationdoesnotimply,evenintheabsenceofaspecificstatement,thatsuchnamesareexempt
fromtherelevantprotectivelawsandregulationsandthereforefreeforgeneraluse.
Thepublisher,theauthorsandtheeditorsaresafetoassumethattheadviceandinformationinthis
book are believed to be true and accurate at the date of publication. Neither the publisher nor the
authors or the editors give a warranty, express or implied, with respect to the material contained
hereinorforanyerrorsoromissionsthatmayhavebeenmade.
Printedonacid-freepaper
Springer Science+Business Media LLC New York is part of Springer Science+Business Media
(www.springer.com)
Foreword
It is with great pleasure that I can write a foreword for the second edition of the
book Retail Supply Chain Management: Quantitative Models and Empirical
Studies. I want to congratulate the editors, Narendra Agrawal and Stephen Smith,
forcompilingthisimpressivevolume.Likeitsfirstedition,thisvolumecontinuesto
be a book that provides a solid reference on research on retail supply chains and
inspiresnewresearchonthissubject.
Retailingformsthepartofthesupplychainthatinterfacesbetweentheultimate
consumersandtherestofthesupplychain.Assuch,itisoftenviewedasthepartof
thesupplychainwheretherealdemandsoftheconsumersfirstshowup.Whether
wearetalkingaboutaphysicalretailstoreoravirtualstore,theconsumerdemands
thatoccurheredrivethedemandsintherestofthesupplychain.Sointhatsense,it
islikethefrontierofallsupplychains.
ItisthereforegratifyingtoseeNarenandStevefocusingtheirvolumeonretail
supplychains.Theinnovations,lessonsinpractice,andnewtechnologicalsolutions
inmanagingretailsupplychainsarenotjustimportantinretailingbutcrucialinthe
ultimateeffectivemanagementofthecompletesupplychain.
There are two distinguishing features in the research of retail supply chains,
whichthecurrentvolumecaptureswell.First,retailsupplychainsareloadedwitha
lotofempiricaldata.Thisisanareathathastraditionallybeenrichindata,which
provides fertile grounds for us to pursue empirical research. Second, research on
retail supplychainsnaturally intersects with research inmarketingintwoways—
category management and pricing. Of course, category management and pricing
have traditionally been key areas inthe marketingliterature. Butwhatthe current
volumehasaddedisthedimensionofsupplychainmanagementtothesemarketing
approaches.Integratingcategorymanagementwithinventoryplanningandcoordi-
nating price optimization with supply chain management are unique dimensions
thatdistinguishthisbook.
v
vi Foreword
Thesecondeditionexpandedonthedistinguishingfeaturesofthepreviousone
with new analytics on data accuracy and visibility, retail workforce management,
and business models of fast fashion. These are topics that are both timely and
criticaltosuccessesinretailing.
I am sure that the readers will share my great enthusiasm for this book as a
wonderfuladditiontotheemergingliteratureofretailsupplychainmanagement.
ThomaProfessorofOperations,InformationandTechnology, HauL.Lee
GraduateSchoolofBusiness,StanfordUniversity
Stanford,CA,USA
Preface
We began working in retail supply chain management through the retail research
programoftheRetailManagementInstitute(RMI)atSantaClaraUniversity.RMI
was founded in 1980 by its current Executive Director, Dale Achabal, who is the
L.J. Skaggs Distinguished Professor of Marketing at Santa Clara University.
Research at RMI has focused on marketing and supply chain decisions in depart-
ment store chains and specialty retailers. Over 30 major retail chains have partic-
ipated in our research by providing data and problem descriptions and by
sponsoring projects. The goal of our research has always been to develop new
analyticaltoolsforsupportingtheoperationalandplanningdecisionsthatretailers
face.Thesponsoringorganizationssawthepotentialbenefitfromdevelopingnew
analytical methodologies that could take advantage of the capabilities offered by
emerging information technologies in retailing. Consequently, a number of the
decisionsupportprototypesdevelopedatRMIwerelaterconvertedintooperational
softwaresystemsbyconsultingorganizationsandapplicationsoftwareproductsby
independentvendors.Inthissense,theresearchdoneatRMI,aswellastheresearch
by other authors of chapters in this volume, has led to an array of retailing
applications that constitute a great success story for management science and for
supplychainmanagementinparticular.
We are very pleased to present the second edition of our book following the
tremendoussuccessofthefirstone.Thishasprovidedtheauthorsanopportunityto
updatetheircontributionstoincludethemostrecentdevelopmentsinourfieldsince
2009whenthefirsteditionwaspublished.Wehavealsoaddedthreenewchapters
onrecenttopicswhichreflectareasofgreatinterestandrelevancetotheacademic
andprofessionalcommunitiesalike. These topics arefastfashionretailstrategies,
decisionmakinginthepresenceofinventoryrecordinaccuracies,andretailwork-
forcescheduling.Wehopethattheneweditionwillserveasausefulresourcefor
academic researchers and practitioners who are looking for the state of the art on
studiesonthetopicofretailsupplychainmanagement.
vii
viii Preface
We are grateful to all authors who have contributed their research to this
endeavor and thank them for their patience as we went through multiple rounds
of the review process for their submissions. We are indebted to our colleagues
who painstakingly reviewed the various revisions of the submissions, adhering to
standards typical of professional journals. These reviewers include Goker Aydin
(Indiana University), Gerard Cachon (University of Pennsylvania), Nicole
DeHoratius (University of Chicago), Vishal Gaur (Cornell University), Warren
Hausman(StanfordUniversity),KirthiKalyanam(SantaClaraUniversity),Gu¨rhan
Ko¨k(Koc¸University),StevenNahmias(SantaClaraUniversity),MarceloOlivares
(Columbia University), Andy Tsay (Santa Clara University), and Jin Whang
(Stanford University). Finally, we would like to thank Gary Folven, our original
editor with Kluwer and later with Springer Publishing, who encouraged us to
undertake this project and supported our efforts. Matthew Amboy, the current
Editor (Business & Economics: OR & MS) at Springer, has also been extremely
supportiveofourworkandpatientwithourschedules.
WewishtothankourcolleaguesfromtheMarketingDepartment,DaleAchabal,
ShelbyMcIntyre,andKirthiKalyanam,forcollaboratingwithusonawiderangeof
projects. Many retail executives from sponsoring companies have contributed
immensely to our research. There are simply too many for us to acknowledge
individually but we are very grateful for their continued support. And we are
especially gratefulto our wives, Niti Agrawal and Karen Graul, and ourchildren,
NishantandNiharAgrawal,andGregandDanielSmith,forgraciouslysupporting
usduringthetimeittooktocompletethisvolume.
SantaClara,CA,USA NarendraAgrawal
StephenA.Smith
Contents
1 OverviewofChapters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
NarendraAgrawalandStephenA.Smith
2 SupplyChainPlanningProcessesforTwoMajorRetailers. . . . . . 11
NarendraAgrawalandStephenA.Smith
3 TheEffectsofFirmSizeandSalesGrowthRateonInventory
TurnoverPerformanceintheU.S.RetailSector. . . . . . . . . . . . . . . 25
VishalGaurandSaravananKesavan
4 TheRoleofExecutioninManagingProductAvailability. . . . . . . . 53
NicoleDeHoratiusandZeynepTon
5 AnalyticsforOperationalVisibilityintheRetailStore:
TheCasesofCensoredDemandandInventory
RecordInaccuracy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
LiChenandAdamJ.Mersereau
6 AnOverviewofIndustryPracticeandEmpiricalResearch
inRetailWorkforceManagement. . . . . . . . . . . . . . . . . . . . . . . . . . 113
SaravananKesavanandVidyaMani
7 CategoryCaptainshipPracticesintheRetailIndustry. . . . . . . . . . 147
Mu¨minKurtulus¸ andL.BerilToktay
8 AssortmentPlanning:ReviewofLiterature
andIndustryPractice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175
A.Gu¨rhanKo¨k,MarshallL.Fisher,andRamnathVaidyanathan
9 FastFashion:BusinessModelOverviewandResearch
Opportunities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 237
FelipeCaroandVictorMart´ınez-de-Albe´niz
ix