Online Demand Fulfillment Problem with Initial Inventory Placement: A Regret Analysis
Publication
, Journal Article
Arlotto, A; Keskin, IN; Wei, Y
Published in: Operations Research
Studying How Inventory Placement Shapes Online Fulfillment PerformanceA growing share of e-commerce operations involves deciding not only how to fulfill incoming orders, but also where to position inventory beforehand. In “Online Demand Fulfillment Problem with Initial Inventory Placement: A Regret Analysis,” Arlotto, Keskin, and Wei examine how these two decisions interact. The authors introduce a joint regret framework that evaluates the performance of a fulfillment policy together with the initial allocation of inventory across warehouses. Their analysis shows that probabilistic fulfillment inevitably accumulates regret that grows with the length of the planning horizon, regardless of how inventory is initially placed. By contrast, when combined with an appropriate offline inventory placement, the score-based approach achieves a regret bound that remains stable over time and scales only with the size of the system. The study offers insight into the role of initial placement in shaping fulfillment policy performance.
