An Application of Newsboy Problem in Supply Chain Optimisation of Online Fashion E-Commerce
This work addresses inventory management for online fashion retailers, but it appears incremental as it applies an existing newsboy problem framework to a specific company's data.
The authors tackled supply chain optimization for an online fashion e-commerce company by developing a model to predict SKU quantities, optimizing fulfillment and utilization metrics, and compared it with baseline regression solutions.
We describe a supply chain optimization model deployed in an online fashion e-commerce company in India called Myntra. Our model is simple, elegant and easy to put into service. The model utilizes historic data and predicts the quantity of Stock Keeping Units (SKUs) to hold so that the metrics "Fulfilment Index" and "Utilization Index" are optimized. We present the mathematics central to our model as well as compare the performance of our model with baseline regression based solutions.