Anticipatory shipment for pickup point supply

Many retailers allow customers to shop online and collect their orders at a pickup point nearby. In this paper, we study the anticipatory shipment of items to such pickup points in order to improve service and operational efficiency. We formulate a stochastic programming model to support the selection of products and associated quantities to ship to the pickup points in anticipation of customers’ demand. The results of our numerical experiments suggest that anticipatory shipments can have substantial benefits both in terms of cost and lead-time. The benefits increase with the storage space at the pickup point. The anticipatory shipment strategy is especially beneficial in a setting which requires short delivery lead- times and when the e-fulfilment warehouse is further away.