Order planning policies for business-to-consumer e-tail stores

Adequate order planning is essential in business-to-consumer (B2C) e-tail stores, as they often have to deal with stock-outs due to the highly variable demand cycles. Stock-outs result in a decrease in the level of service because incomplete orders are dispatched and additional costs are incurred because the items in an order from the same customer are met by sending items in more than one consignment. This paper puts forward an order planning framework for e-tail stores, which uses drop-shipping as an alternative in order to fulfil complete orders. Order planning is based on an inventory rationing model that considers the unit margin of each product and the order size to maintain the internal stock at the optimal allocation level and to placing the service at the disposal of more clients. Moreover, the influence of the proposed planning policies on the efficiency of the picking operation was evaluated.