Abstract:Order splitting is one of the challenging problems faced by online supermarkets with multiple warehouses in one metropolitan areas. This paper proposes a package consolidation strategy,aimed to reduce the number of packages splitted,to fulfill split orders,which can effectively reduce the shipping cost,customer disturbance,and environmental pollution by the packages. To minimize the total order fulfillment cost,the paper models for the split strategy and the package consolidation strategy respectively,based upon which establishes the economic decision model. The economic decision model is analyzed in terms of the number of orders and the average number of split orders and the conditions when the the package consolidation strategy is applicable is derived. Managerial insights are also given. The numerical experiments verify the analytical results and managerial insights,which may guide online supermarkets in applying the package consolidation strategy in practice.