COMMUNICATIONS IN CYBERNETICS, SYSTEMS SCIENCE AND ENGINEERING 7 7 COMMUNICATIONS IN CYBERNETICS, SYSTEMS SCIENCE AND ENGINEERING 7 Choi Fashion Retail Supply Chain Management Fashion Retail Supply Chain Management: A Systems Optimization Approach is a comprehensive reference source that provides the state-of-the-art findings on many important emerging research issues related to retail supply chain management and optimization problems. The book takes an explicit systems approach, and discusses retail- led fashion supply chain coordination mechanisms and consumer market information- driven fashion retail supply chain models, as well as suggesting future research avenues. This volume will be of interest not only to those involved in the fashion industry, but also to academics and practitioners in the wider fields of business, manufacturing engineering, systems engineering and supply chain management. ABOUT THE BOOK SERIES Communications in Cybernetics, Systems Science and Engineering (CCSSE) is a cross- disciplinary book series devoted to theoretical and applied research contributions, that cater to a rapidly growing worldwide interest in a cybernetic and systemic methodology with an ever-increasing capacity to deal with new challenges in a way that traditional science cannot.
The series aims to become a comprehensive reference work on and guide to developments within the field and strategies required for better implementation of advances, with a view to environmental protection and sustainable social and economic development. The CCSSE Tsan-Ming Choi series targets all working in theoretical and applied fields of cybernetics, systems science and engineering, e. academics, researchers and consultants, computer and information scientists, development and systems engineers, mathematicians, management cyberneticists Fashion Retail Supply Chain Management and systemists, medical scientists, and intelligent and manufacturing engineers in industry, as well as leading decision- and policy-makers. SERIES EDITOR: JEFFREY ‘YI-LIN’ FORREST ISSN: 2164-9693 A Systems Optimization Approach an informa business Fashion Retail Supply Chain Management Communications in Cybernetics, Systems Science and Engineering ISSN: 2164-9693 Book Series Editor: Jeffrey Yi-Lin Forrest International Institute for General Systems Studies, Grove City, USA Slippery Rock University, Slippery Rock, USA Volume 7 Fashion Retail Supply Chain Management A Systems Optimization Approach Tsan-Ming Choi Business Division, Institute of Textiles and Clothing, The Hong Kong Polytechnic University, Hung Hom, Kowloon, Hong Kong CRC Press/Balkema is an imprint of the Taylor & Francis Group, an informa business © 2014 Taylor & Francis Group, London, UK Typeset by MPS Limited, Chennai, India Printed and bound by CPI Group (UK) Ltd, Croydon, CR0 4YY All rights reserved.
No part of this publication or the information contained herein may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, by photocopying, recording or otherwise, without written prior permission from the publishers. Although all care is taken to ensure integrity and the quality of this publication and the information herein, no responsibility is assumed by the publishers nor the author for any damage to the property or persons as a result of operation or use of this publication and/or the information contained herein. Library of Congress Cataloging-in-Publication Data Choi,Tsan-Ming. Fashion retail supply chain management : a systems optimization approach / Tsan-Ming Choi.
pages cm — (Communications in cybernetics, systems science and engineering ;Volume 7) Includes bibliographical references and index.9’20688–dc23 2014008069 Published by: CRC Press/Balkema P. Box 11320, 2301 EH Leiden,The Netherlands e-mail: Pub.com ISBN: 978-1-138-00028-5 (Hbk) ISBN: 978-0-203-76469-5 (eBook PDF) Table of contents Editorial board vii Preface ix About the author xi 1 Fashion retail supply chain management – An introduction 1 1.1 What is fashion retail supply chain management? 1 1.2 Overview of this book 2 References 5 2 Customer service management in fashion retail supply chains 7 2.2 Quantitative customer service performance measures 8 2.3 Retail service quality scale 9 2.1 Conceptual model and related studies 9 2.2 The RSQS based systems optimization model 10 2.4 Numerical sensitivity analysis 17 2.4 Conceptual framework: Deming’s Quality Management Framework 24 2.5 Conclusion 28 References 28 Appendix: Tables of the numerical analysis 29 3 Inventory models and coordination in fashion retail supply chains 33 3.2 The EOQ model-based retail inventory problem 34 3.1 An illustrative example 34 3.2 Optimal inventory decisions and ordering frequency 34 3.3 The newsvendor model-based retail inventory problem 36 3.1 An illustrative fast fashion retailing example 36 3.2 Profit maximization model 37 3.4 Coordination in fashion retail supply chain systems 39 3.1 EOQ model based inventory planning 39 3.2 Newsvendor model-based inventory planning 39 vi Table of contents 3.1 The EOQ-based model 41 3.2 The newsvendor problem-based model 43 3.6 Conclusion 46 References 46 Appendix: Tables of the numerical analysis 47 4 Efficient consumer response in fashion retail supply chain systems 51 4.2 Basic analytical model 52 4.3 Profit analysis for the fashion retailer 54 4.4 All-win situation 58 4.5 Supply chain coordination 59 4.7 Conclusion 64 References 65 Appendix: Tables of the numerical analysis 66 5 New product selection in fashion retail supply chains 69 5.3 Analysis: Scenario one 73 5.4 Analysis: Scenario two 74 5.6 Conclusion 79 References 80 Appendix: Tables of the numerical analysis 81 6 Mean-risk analysis for fashion retail supply chain information systems projects 83 6.3 Mean-variance analysis 85 6.4 Mean-semi-variance approach 90 6.5 Safety-first objective 91 6.6 Information system portfolio 92 6.7 Conclusion 93 References 93 7 Fashion retail supply chain management – Concluding remarks 95 7.2 Future research directions 98 References 101 Subject index 105 Editorial board Michael C. Jackson, University of Hull, UK Jerzy Jozefczyk, Wroclaw University of Technology, Poland Doncho Petkov, Eastern Connecticut State University, USA Vladimir Tsurkov, Russian Academy of Sciences, Russia Shouyang Wang, Chinese Academy of Sciences, P. China ADVISORY EDITORIAL BOARD C.
Philip Chen, University of Macau, P. China Zengru Di, Beijing Normal University, P. China Raul Espejo, Syncho Ltd. and World Organization of Systems and Cybernetics, UK Keith W.
Hipel, University of Waterloo, Canada Baoding Liu, Tsinghua University, China Nagendra Nagarur, State University of New York at Binghamton, USA John Pourdehnad, University of Pennsylvania, USA Brian Howard Rudall, Institute of the World Organisation of Systems and Cybernetics & Bangor University, UK Rudolf Scheidl, Johannes Kepler University of Linz, Austria Markus Schwaninger, Institute of Management, University of St. Gallen, Switzerland This page intentionally left blank Preface Fashion retail supply chains are retailer-led dynamic multi-echelon systems in which fashion products, related information and funds flow between the point of origin to the point of consumption in both forward and reverse directions. Decisions in the fash- ion retail supply chain systems are highly consumer demand-driven. Over the past few years, more and more studies have been exploring the fashion retail supply chain man- agement related problems though most of them are based on empirical analysis and exploratory case studies.
Motivated by the importance of fashion retail supply chain management and the relatively few theoretical analyses being done in this context, I have authored this book and explored different important topics by an analytical sys- tems optimization approach. I believe that this book will be a pioneering text focusing on this important topic. This book includes seven chapters. Chapter 1 introduces the topic and presents an overview of the book.
Chapter 2 examines the customer service management challenge in fashion retail supply chains. Both analytical and conceptual tools are discussed. Sup- ply chain service coordination is proposed and consumer welfare is also considered in the analysis. Chapter 3 explores two classical inventory models and the issue of coor- dination in the respective fashion retail supply chain systems.
To achieve coordination incentive alignment schemes are discussed. Chapter 4 investigates the popular and commonly seen efficient consumer response program in fashion retail supply chains. The critical role played by the consumer welfare coefficient is examined. Chapter 5 discusses the new product selection problem in fashion retail supply chains with the consideration of market uncertainty.
Chapter 6 presents a few analytical models for evaluating risky fashion retail supply chain information systems projects. Chapter 7 concludes the book and discusses various managerial insights and future research direc- tions. As a remark, every chapter in this book can be taken as a self-contained article and the notation within each chapter is consistently employed. In terms of the potential audience, I believe that this book is suitable for both researchers and practitioners interested in fashion retail supply chain management, and retail operations management.
It can also be a good reference book for under- graduate and postgraduate students for related subjects. As a matter of fact, many materials covered in this book are based on my own lecture notes used in my MBA/MA classes. Since this book targets a rather broad pool of potential readers, I intentionally reduce the complexity of the models and most of the analytical results can be understood easily by readers with a fundamental knowledge of calculus. x Preface In terms of presentation, I use simple “layman’’ terms as much as possible, and also prepare a lot of numerical examples to illustrate the concepts and theories explored in the analytical studies.
I believe that the book is easy to understand by business managers as well as undergraduate and postgraduate students. Before ending, I would like to take this opportunity to thank Jeffrey Yi Lin Forest, Alistair Bright and José van der Veer for their kindest help in the preparation and completion of this important book project. I am also indebted to my family, colleagues, friends, and students, who have been supporting me during the development of this book. In particular, my former and current PhD students have helped me with the proofreading of this book.
This book is partially supported by the funding of the Research Grants Council of Hong Kong under grant number PolyU 5424/11H. Tsan-Ming Choi (PhD) The Hong Kong Polytechnic University December 2013 About the author Tsan-Ming Choi (Jason) is currently teaching at The Hong Kong Polytechnic University. Over the past few years, he has actively participated in a variety of research projects on supply chain management and applied opti- mization. He has authored/edited ten research-oriented handbooks and guest-edited twenty special issues for various leading journals on related topics.
He has pub- lished extensively in peer-refereed academic journals such as Annals of Operations Research, Automatica, Computers and Operations Research, Decision Support Systems, European Journal of Operational Research, IEEE Transactions on Automatic Control, IEEE Trans- actions on Automation Science and Engineering, IEEE Transactions on Industrial Informatics, IEEE Transac- tions on Systems, Man, and Cybernetics (Parts A, B, C; Systems), International Journal of Production Economics, International Journal of Production Research, Journal of Fashion Marketing and Management, Journal of the Operational Research Society, Journal of the Textile Institute, Omega, Production and Operations Management, Service Science (INFORMS Journal), Supply Chain Management: An International Journal, Textile Research Journal, Tourism Management, Transportation Research – Part E, etc. He is currently an area editor/associate editor/guest editor of Annals of Operations Research, Asia-Pacific Journal of Operational Research, Decision Sci- ences, Decision Support Systems, European Management Journal, IEEE Transactions on Industrial Informatics, IEEE Transactions on Systems, Man, and Cybernetics – Systems, Information Sciences, Journal of the Operational Research Society, Produc- tion and Operations Management, and various other operations management and information systems journals. He is also an executive committee member/officer of professional organizations such as IEEE-SMC (HK) and POMS (HK). He received the President’s Award for Excellent Achievement of The Hong Kong Polytechnic Uni- versity in 2008.
He was named distinguished alumnus of the Department of Systems Engineering and Engineering Management, Faculty of Engineering, The Chinese Uni- versity of Hong Kong, during the Faculty’s 20th Anniversary in 2011. Most recently, he received the Best Associate Editor Award of IEEE SMC Society in 2013. Before join- ing his current department in fall 2004, he was an assistant professor at The Chinese University of Hong Kong. He is a member of various internationally renowned profes- sional organizations and societies such as IEEE, INFORMS, ITAA, POMS, MSOM, and SMC.
This page intentionally left blank Chapter 1 Fashion retail supply chain management – An introduction SUMMARY Fashion retail supply chain management (FRSCM) is a critically important topic.