Location-Based Pricing and Channel Selection in a Supply Chain: A Case Study from the Food Retail Industry

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Many retailers nowadays operate in an Internet-enabled dual-channel supply chain setting, referred to as “click and mortar”. In such a structure, products and services are delivered through both online B2C (business-to-consumer e-tail) and offline B2C (traditional brick and mortar retail) channels. In this paper, we develop and present a unified modeling approach that reflects a real-world dual-channel supply chain in the food retail industry. Motivated by the actual business operations of a case study, we incorporate the spatial locations of customers, as well as other logistics and operational costs, into the service provider’s pricing and the customers’ channel choice decisions. We develop two models, namely the benchmark and proposed models, and conduct extensive numerical experiments with parameter values centered on actual values. The results reveal that ratio of online and offline profit to the total dual-channel profit vary significantly, depending on the locations of customers and the values of the logistics costs. In addition, our statistical and visual analysis suggest that by jointly optimizing the logistics and operational processes, the service provider can achieve a considerably high profit through both channels, without necessarily expanding the size of its geographical service areas.

Please cite this paper as follows (click to download):

Wei, C., Asian, S., Ertek, G., Hu, Z.-H. (2018) Location-based pricing and channel selection in a supply chain: a case study from the food retail industry. Annals of Operations Research. https://doi.org/10.1007/s10479-018-3040-7




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Analyzing the Solutions of DEA Through Information Visualization and Data Mining Techniques: SmartDEA Framework

Data envelopment analysis (DEA) has proven to be a useful tool for assessing e
fficiency or productivity of organizations, which is of vital practical importance in managerial decision making. DEA provides a significant amount of information from which analysts and managers derive insights and guidelines to promote their existing performances. Regarding to this fact, e
ffective and methodologic analysis and interpretation of DEA solutions are very critical. The main objective of this study is then to develop a general decision support system (DSS) framework to analyze the solutions of basic DEA models. The paper formally shows how the solutions of DEA models should be structured so that these solutions can be examined and interpreted by analysts through information visualization and data mining techniques e
ectively. An innovative and convenient DEA solver, SmartDEA, is designed and developed in accordance with the proposed analysis framework. The developed software provides a DEA solution which is consistent with the framework and is ready-to-analyze with data mining tools, through a table-based structure. The developed framework is tested and applied in a real world project for benchmarking the vendors of a leading Turkish automotive company. The results show the e
ectiveness and the effi
cacy of the proposed framework.

Akçay, A.E., Ertek, G., Büyüközkan, G. “Analyzing the solutions of DEA through information visualization and data mining techniques: SmartDEA framework”. “Expert Systems with Applications”. 39, pp. 7763–7775.

Note: This is the final draft version of this paper. Please cite this paper (or this final draft) as above.
Analyzing the solutions of DEA through information visualization and data mining techniques: SmartDEA framework

Dr. Gürdal Ertek recommends the following related books:




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Cross-cultural training: a crucial approach to improve the success of expatriate assignment in the United Arab Emirates

Cross Cultural Training United Arab Emirates (UAE)

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Expatriate training and development is progressively turning into a crucial human resource development issue for the multinational corporations (MNCs). The motivation for this study is to explore the impact of cross- cultural training (CCT) on the adjustment challenges of Western expatriate managers in the UAE. The findings indicate that the expatriate managers, who were provided with CCT, adjusted more rapidly in their international assignment in the UAE than the expatriates who were not provided with any CCT. This research has nevertheless demonstrated that not only are MNCs in the UAE failing to provide adequate CCT and support for their expatriates, but they are also providing inadequate CCT and support to the expatriate’s accompanying family members. The present study contributes to the discussion about whether MNCs routinely provide their expatriate managers with sufficient CCT. Furthermore, this study has substantial implications for managers and proposes areas for future research in this field.

Please cite the paper as follows:

Tahir, R., Ertek, G. (2018) Cross-cultural training: a crucial approach to improve the success of expatriate assignment in the United Arab Emirates. Middle East Journal of Management 2018 – Vol. 5, No.1 pp. 50 – 74.



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Crossdocking Insights from a Third Party Logistics Firm in Turkey

In the book “The Silk Road: Two Thousand Years in the Heart of Asia,” Wood (2002) remarkably suggests that “the very name of ‘Silk Road’ is somewhat misleading.” Wood explains as follows: “It [the name ‘Silk Road’] suggests a continuous journey, whereas goods were in fact transported by a series of routes, a series of agents, passing through many hands before they reached their ultimate destination.”

It’s striking to realize that the Silk Road was a complete “crossdocking” operation, executed on a geographically dispersed collection of hubs and routes. Products neither traveled on a single route nor were they stored on the way. Rather, they were staged for short periods at the hubs, and then were passed on towards the next hub on the route, typically by a new caravan or transportation mode.

Today, crossdocking is still very important and popular. Crossdocking has a great potential to bring great financial and time savings in logistics. For example, most of the logistics success of Wal-Mart, the world’s leading retailer, is attributed to crossdocking.

In this chapter, different types of crossdocking are reviewed, and the crossdocking applications of a 3rd party logistics firm based in Istanbul, Turkey is presented. Istanbul was one of the two final destinations on the Silk Road, together with Rome. Today, it is home to best practices of crossdocking by a multitude of logistics companies, including the company described in this chapter.

Crossdocking is a supply chain strategy that can accomplish significant reductions in total costs and in lead times in a supply chain. In this strategy, crossdock facilities (CFs) act as transfer points where inbound product flow is synchronized with outbound product flow to essentially eliminate storage of inventory. Two other strategies applied in distribution of products are traditional distribution with warehouses and direct shipment (Simchi-Levi et al., 2003).

In traditional distribution with warehouses, the warehouse typically houses activities of receiving, putaway, storage, replenishment, order picking, and shipping. Storage is well known to contribute greatly to costs due to inventory holding. Order picking is well known to contribute greatly to costs, due to labor requirements or the investments in costly automated equipment (Frazelle, 2001). In pure crossdocking, the activites carried out are receiving, staging, and shipping. Staging of products should last for a very limited time span, such as 24 hours, for the facility to be considered a CF.

Increased competition in almost every industry, especially retail and grocery industries, has been pushing companies to search for ways of reducing costs throughout the supply chain. For example, grocery retailers and distributors operate under profit margins of approximately 1.5% (Modern Materials Handling, 2003). Cooperating with supply chain partners to reduce the system-wide costs throughout the supply chain and sharing the benefits is a strategy followed by many companies. The Internet allows companies to communicate among each other in real time at costs significantly lower than the past, when establishing Electronic Data Interchange (EDI) systems was required for real time communication (Brockmann, 1999). These listed factors have increased the applicability of crossdocking as a supply chain strategy.

Crossdocking in various forms has been in use for a long time, especially by package delivery companies. However, its recent popularity can be attributed to its extensive use by Wal-Mart, which implemented this strategy successfully and eventually became the world’s largest retailer with more than 5,000 stores throughout the world (Stalk et al., 1992).

Napolitano (2000) provides practical guidelines to planning, designing, and implementing a crossdock operation. This paper firstly provides a brief tutorial on crossdocking through a review of literature, covering Napolitano (2000) and other sources. Then a case study that describes the crossdocking operations of Ekol Logistics, a leading 3rd party logistics firm in Turkey, is presented. The challenges faced by this firm in implementing crossdocking are listed, and insights are summarized.

Ertek, G., (2012) “Crossdocking Insights from a Third Party Logistics Firm in Turkey”, in Managing Supply Chains on the Silk Road: Strategy, Performance, and Risk,  Eds: Çağrı Haksöz, Sridhar Seshadri and Ananth V. Iyer.

Note: This is the final draft version of this paper. Please cite this paper (or this final draft) as above.

Crossdocking Insights from a Third Party Logistics Firm in Turkey

Dr. Gürdal Ertek recommends the following related books:




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