Title: Strategic decisions on the establishment of an offshore warehouse for manufacturers with an e-commerce channel

Authors: Yongzhong Wu; Qiran Wang; Yongwu Zhou; Mianmian Huang

Addresses: School of Business Administration, South China University of Technology, 381 Wushan Road, Tianhe District, Guangzhou, Guangdong, 510641, China ' School of Business Administration, South China University of Technology, 381 Wushan Road, Tianhe District, Guangzhou, Guangdong, 510641, China ' School of Business Administration, South China University of Technology, 381 Wushan Road, Tianhe District, Guangzhou, Guangdong, 510641, China ' School of Business Administration, South China University of Technology, 381 Wushan Road, Tianhe District, Guangzhou, Guangdong, 510641, China

Abstract: While Chinese manufacturers increasingly use cross-border e-commerce platforms to sell products to overseas customers, international express delivery is commonly used to meet the requirement of short order-to-delivery time for the online end customers. In order to reduce the logistics cost while meeting the service level, many manufacturers are considering renting or constructing an offshore warehouse. Goods are shipped in bulk to the offshore warehouse in advance and the daily customer orders are fulfilled by the warehouse inventory. Strategic decisions arise regarding the need for as well as the location and capacity of an offshore warehouse. This paper establishes a dedicate discrete-event simulation model to analyse these strategic decisions with considerations of key variables in different scenarios, including the order arrival rate, inventory cost and warehouse costs. The optimal inventory policy of the offshore warehouse is obtained via a metaheuristic method embedded in the simulation model. Experiments and sensitivity analysis are conducted to evaluate the impact of the key variables on the strategic decisions. The established model provides a systematic method for the decision-making regarding the optimal design of offshore warehouses for the fast-growing cross-border e-commerce industry.

Keywords: e-commerce; discrete-event simulation; order-to-delivery time; offshore warehouse.

DOI: 10.1504/IJISE.2021.115323

International Journal of Industrial and Systems Engineering, 2021 Vol.38 No.2, pp.239 - 262

Received: 02 Apr 2019
Accepted: 14 Aug 2019
Published online: 28 May 2021 *

Full-text access for editors Full-text access for subscribers Purchase this article Comment on this article