International Journal of Production Economics
- Volumen: 236
- Fecha: 01 June 2021
- ISSN: 09255273
- Source Type: Journal
- DOI: 10.1016/j.ijpe.2021.108109
- Document Type: Article
- Publisher: Elsevier B.V.
© 2021 The Author(s)The paper aims to present a theoretical study of inventory allocation in two retailer warehouses that form a spatial duopoly on the finite horizon, where the shortage of goods, and not only prices, determines their market areas, depending on the customer's travel decisions to minimise not only the cost of purchasing the items but also the travel expenses under uncertainties of availability of the products. The customers' decision on which store to visit first is influenced by their estimation of regarding shortages of goods. The demand size required by arrived customers can be one or more units of goods. Delays in the required amount and all flows in the production¿inventory¿logistic system have varying parameters, simulated by the Network Simulation Method (NSM). The impact of delay in supply chain, which provides the products and consequently creates the shortages on market areas, is studied at varying interest rates and the shortened, unknown length of the time horizon. The annuity stream approach of evaluation of ordering policies is applied in areas of spatial duopoly where the optimal ordering policy depends on the interaction between the prices and the shortages of goods in the studied duopolies. Customer travelling problem (CTP) is defined, which determines the market area for allocated inventories. In our study, various distributions of customers' quantity demand at varying shortages and delays of the provision are supposed, presenting their impact on the market area. NSM helps in describing how to study the impact of varying interest rates and stochastic length of the time horizon in the case of shortages of goods as a consequence of delays in supply system activities and how to improve the estimates of NPV and profit in the case of low and varying interest rates.