2019 TutORial: Channel Fulfillment Problem Optimization

Given by Vivek Farias and Jason Acimovic
This tutorial studies the fulfillment-optimization problem, a key optimization problem facing retailers who fulfill online customer orders using inventory that might be distributed across multiple supply nodes, which for omni-channel retailers may include the entire store network in addition to distribution centers. This tutorial formulates and studies the fulfillment optimization problem as an online optimization problem. The first approach we study to solving this problem is similar in spirit to LP-based bid price approaches to network revenue management. The second approach relies on an algorithm based on the primal-dual schema. The approaches are complementary; the first is suitable in a regime where the demand for products is relatively predictable, whereas the latter is applicable to settings where such predictability is not available. In both cases we describe the practical impact of these solutions at real-world retailers. Finally, we discuss outstanding unsolved problems in the area that we believe can have significant impact on practice.