Impact of cross-docking on inventory in a decentralized retail supply chain

Cross-docking can reduce inventory in a retail supply chain but in certain situations it can result in more inventory being required in the stores to achieve the same customer service levels. In this paper we develop models to predict the changes in the retailer’s system-wide inventory levels as a result of cross-docking, an important factor managers must consider when making decisions about cross-docking. We also examine the impact of a number of relevant parameters on the benefit of cross-docking.