Proactive vs. reactive order-fulfillment resource allocation for sea-based logistics
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Date
2018-06Author
Roy, Debjit
Shahab Mofidi, Seyed
Pazour, Jennifer A.
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We study proactive and reactive sea-based order-fulfillment decisions for a set of SKUs. In such
systems, a proactive strategy may be more costly than a reactive strategy and variable marginal
costs change with respect to an activity profile. We derive the optimal sets of SKUs and their
quantities to handle prior (proactive strategy) or after (reactive strategy) demand materializes.
Counterintuitive results show the proactive set may not necessarily include the high-demanded
SKUs. This work extends the newsvendor model by analyzing negative marginal shortage costs.
The model is illustrated with historical data from a sea-based logistics military application.
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