Title: How consumer demand affects order quantity in practice: an empirical study on inventory management decisions in fashion retailing

Authors: Hau-Ling Chan; Tsan-Ming Choi; Yee-Man Ho

Addresses: Institute of Textiles and Clothing, The Hong Kong Polytechnic University, Hung Hom, Kowloon, Hong Kong ' Institute of Textiles and Clothing, The Hong Kong Polytechnic University, Hung Hom, Kowloon, Hong Kong ' Institute of Textiles and Clothing, The Hong Kong Polytechnic University, Hung Hom, Kowloon, Hong Kong

Abstract: This study investigates the real inventory decisions in a fashion retailing company through a real sales data-based empirical study. Specifically, we collect a nine months sample sales dataset of 189 fashion product items from a Hong Kong-based fashion retailing company, and statistically verify relationships between the order quantity and several critical factors. Our findings reveal that: 1) the mean of demand, the standard variation of demand, and the profit margin of the fashion items are statistical significantly correlated with the ordering quantity decision of the case company; 2) there is no statistically significant difference on the order deviation from the mean of demand between the high and low profit margin products. We explain these findings by relating them to the analytical models under the newsvendor problem setting. Implications and important insights are discussed.

Keywords: fashion industry; inventory management; empirical study; consumer demand; data analysis; newsvendor problem; order quantity; fashion retailing; Hong Kong; profit margin.

DOI: 10.1504/IJIR.2016.080327

International Journal of Inventory Research, 2016 Vol.3 No.2, pp.102 - 114

Available online: 10 Nov 2016 *

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