Replenishment support decision model for a try­-before-you-­buy retail fashion e­commerce

Abstract

A try before you buy business model is a type of sales strategy in which customers are allowed to test a product before making a purchase. As the try before you buy online business model is a topic on which there is limited public scholarly research, the purpose of this research is to provide an initial approach to the subject by presenting a tool to support the replenishment strategy of Curve Catch, a fashion e­commerce retailer. A simulation engine characterized by two main components has been built: replenishment and a demand generator. Model development is built on artificially generated data based on real data of Curve Catch. Based on the literature inherent to inventory management and through the use of simulation ­optimization, the model provides managerial guidance on how to manage r,Q policy in a system where most goods shipped to customers are returned. The tool highlights the need to optimize the use of reorder point and economic order quantity to achieve better business performance. This is because conventional formulas, if not adjusted to the specific setting, perform sub optimally.The model also provides insights into the levels of lost sales due to out stocking and the quality of service provided to customers. Studying the relationships among these three KPIs provides insight into what trade­ offs are relevant in planning a continuous review replenishment strategy.

Date of Award	3 Feb 2023
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	Joren Gijsbrechts (Supervisor)