As a new phenomenon of grocery business digital transition, the micro-fulfillment center (MFC) requires further exploration of its management issues. This study aims to address the MFC assortment and inventory decision problem for the digital grocery ecosystem. With the goal of maximizing the profit, we first propose an MFC inventory decision framework based on the Markov decision process. Under this decision framework, we analyze various inventory decision scenarios, including single-period, multi-period, deterministic demand, stationary demand distribution, and varying demand distribution cases. To solve the problem under these scenarios, we propose several effective heuristics and algorithms. Experimental results show that the proposed heuristic policies outperform the benchmark significantly. Meanwhile, based on the critical findings, we also provide management insights for the MFC inventory problem. This study contributes to the research and practice in the field of grocery business digital transformation and digital ecosystems.


Paper Number 1369; Track Platforms; Complete Paper


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