Recalibrating retail store inventory service levels during credit card promotions

Abstract

Cashless payment methods are growing in popularity, especially in the backdrop of the COVID19 pandemic. Credit cards are a key instrument within the cashless payment. Retail practitioners try to boost their sales by providing credit card-based promotions to customers. The tendency for customers to overspend when using credit cards is to the advantage of retailers. Retailers claim that the credit card promotions result in a sales increment of 250%. Along with the sales boost, retail stores encounter frequent stockouts and decreasing service levels. This is primarily due to the inaccurate ordering process. This paper provides a framework to set the reorder level considering the sales uplift due to credit card promotions. For the selected case scenario, the proposed framework helps to increase the retail store service level by 0.78%.