Title: Efficient allocation of online grocery orders

Authors: Carlton H. Scott, Judy E. Scott

Addresses: Paul Merage School of Business, University of California, Irvine, Irvine, CA 92697–3125, USA. ' The Business School, University of Colorado at Denver and Health Sciences Center, P.O. Box 173364, Campus Box 165, Denver, CO 80217–3364, USA

Abstract: Despite some initial setbacks, the online grocery business is viable and growing. In this paper, we discuss the industry|s value proposition, its business models, the various quality issues faced by an e-grocer and the trade-offs faced in the selection of a highly efficient fulfilment strategy. Brick and click grocers usually choose fulfilment from stores rather than distribution centres. However, store fulfilment is vulnerable to congestion and |trolley rage| when pickers of online orders get in the way of traditional shoppers. We propose a management science model for efficient allocation of online grocery orders. The model shows the impact of delivery budget and overall utilisation on store congestion. Contrary to current practice, which typically allocates orders to the nearest store, our model shows the optimal solution. Practitioners can use the model to prevent customer dissatisfaction while researchers will find this study provides a basis for future model extensions and fine-tuning.

Keywords: delivery; distribution centres; efficiency; fulfilment strategy; management science models; online groceries; order allocation; quality; online shopping; e-shopping; grocery industry; e-grocers; store congestion; logistics; internet demand.

DOI: 10.1504/IJPQM.2006.008375

International Journal of Productivity and Quality Management, 2006 Vol.1 No.1/2, pp.88 - 102

Published online: 12 Dec 2005 *

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