Track: Reliability and Maintenance

Abstract

Today many production companies are proposing free shipping as a marketing strategy to attract customers in e-commerce. In this paper we empirically examine the impacts of free shipping on the performance of a production system. Two cases of the transport services are considered: the first is a classic case in which the delivery charges are paid by the customer and the second is the case of the free shipping in which the delivery charges are paid by the company. Discrete flow model is used to describe the production system and to take into account delivery activities. The objective of this work is to provide a performance evaluation study that allows choosing the suitable case according to the indicators of interest such as delivery cost or the demand increase. Numerical results are presented to discuss the choice of the suitable case. Also an optimization study of the production system with free shipping option is presented.