An inventory model of e-marketplace with a promotional program
Journal of Modelling in Management
ISSN: 1746-5664
Article publication date: 20 November 2023
Issue publication date: 13 March 2024
Abstract
Purpose
The rapidly growing e-commerce industry with its special characteristics brings new challenges to the optimization of the supply chain and inventory management. This study aims to investigate the inventory-related optimization of an e-marketplace official store that works on a business-to-customer system when cashback promotion is used to attract more customers. Also, it proposes a new inventory model to maximize the e-commerce profit by optimizing the cashback amount and delivery period.
Design/methodology/approach
The proposed model assumes that customer demand is a function of price and delivery time and that price is affected by the cashback amount. The e-commerce operator has a profit-sharing contract with an e-payment company that facilitates the payment. E-commerce also builds collaboration under a cost-sharing contract with a supplier to ensure product delivery. A mathematical model is developed and the related theories are investigated. A numerical example illustrates the validity of the model and a sensitivity analysis is carried out to give useful insights.
Findings
A new inventory model for an e-market system has been introduced which shows the impact of a cashback promotion on the e-commerce business. This study shows that managers can optimize the cashback amount and its delivery time to get the maximum profit. In certain cases, the manager may set a high cashback amount (e.g. 100%) to attract customers to place more orders.
Originality/value
This study presents a new inventory model for today’s fast-growing e-commerce business; therefore, the results contribute to the understanding of promotion program practices and inventory management and provide insights to develop efficient e-commerce managerial decisions.
Graphical abstract
Keywords
Acknowledgements
The authors are thankful to the anonymous reviewers for their constructive feedback that contributed significantly to enhance this article.
Citation
Hasan, M.R., Daryanto, Y., Triki, C. and Elomri, A. (2024), "An inventory model of e-marketplace with a promotional program", Journal of Modelling in Management, Vol. 19 No. 3, pp. 787-808. https://doi.org/10.1108/JM2-01-2023-0011
Publisher
:Emerald Publishing Limited
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