| Summary: | Retailing business thrives on the implementation of click-and-collect service as one
of the main options for the online orders. The primary concern in this service of
omnichannel practice is the costly picking operations while at the same time it plays
the major role in customer satisfaction. Therefore, the need to pursue an efficient
picking configuration arises. To cope up with this issue, retailers convey the
advantages of using the cross-channel fulfilment to serve the online demand.
This study is oriented towards the formulation of a mathematical model to obtain the
cost-optimal settings and configuration of picking operations for click-and-collect in
omnichannel retailing. The Voronoi diagram approach is employed in the problem
formulation to cluster the customer demand into hexagon region in a hierarchical
facilities level. A suggestion regarding the degree of centralisation for picking activity
has been made by incorporating three primary costs: picking cost, inbound
transportation cost and the fixed cost for setting up picking and collection points.
The result reveals the optimal order picking rate and order accumulation time in each
level of centralisation for the picking facility with a predefined maximum tolerable
distance for customers to collect the orders. Moreover, this output can be used to
identify the attractive offers for customers which complement the needs of internal
fulfilment operations. The result is further supported by the sensitivity analysis
showing the pattern of behaviour changes on the optimal solution given various
values of the model parameters. It is inferred that centralised picking configuration
befits the operations when the maximum tolerable collection distance is low, the fixed
cost is high, optimal picking rate is low and orders accumulation time is high. The
study also highlights the comparison of fully decentralised, centralised and hybrid
configuration which can be an insight for decision-making processes at the
managerial level.
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