Dual-Order Inventory Planning: A Novel Approach to Managing Seasonal Fluctuations in Fashion Retail

We develop and employ a novel dual-order inventory planning model tailored to the inventory planning policy of a fashion retailer in the city of Thessaloniki, Greece. In our approach, the first order is placed at the beginning of the season, while the second order is placed if the stock level of a stock-keeping unit (SKU) falls below a threshold inventory level during the optimal review period. With this dual-order model, the retailer can capture random changes in consumer preferences during the season. The insights derived from implementing the developed methodology in a real-world case of a fashion retailer reveal that the dual-order model significantly mitigates the risks of overstock and stockouts by allowing dynamic adjustments to stock levels in response to actual sales trends and market changes. Moreover, a late ordering policy in week 19 of the season will result, on average, in a 7.9% reduction in total inventory planning costs compared to the costs associated with the different review periods examined.