November 2, 2004
High-school teachers benefit through Purdue mail-order clothing distribution research
WEST LAFAYETTE, Ind. Research at Purdue University that could help mail-order clothing distributors improve how they manage inventory while increasing profits also is enabling high-school teachers to show students how math can be applied to real-world problems.
"What we are looking at is product returns, which is a constant problem for mail-order clothing distributors," said Julie Ann Stuart, an assistant professor of industrial engineering at Purdue. "Often in mail-order clothing distribution, people return clothing because it does not fit, it does not match other clothing or accessories, or they change their mind about the purchase.
"Most of these returns are potentially re-sellable. They are in good condition. Sometimes the package hasn't even been opened."
The returns issue, however, is complicated by various factors, including the high cost of handling and storing items, uncertainty about which items are likely to resell, whether it might be more efficient to reorder items from manufacturers instead of storing them, and how to handle damaged or mismatched items.
"Because the costs of handling product returns are an estimated $37 billion per year in the United States, it is important to improve the returns decision process," said Stuart, who is working to develop methods to help mail-order clothing distributors better manage the flow of returned items.
As a supplement to the research, both funded by the National Science Foundation, Stuart is working with high school math teacher Joyce Gates, from Central Catholic Junior-Senior High School in Lafayette, Ind., in a program called Research Experience for Teachers. The supplemental program, designed for math and science educators who teach kindergarten through 12th grade, is intended to strengthen partnerships between universities and local school districts by getting teachers involved with ongoing NSF-funded research, Stuart said.
Through the supplemental program, funded by NSF's Engineering Directorate, Gates developed case studies in which students try to solve complex business-related problems dealing with catalog clothing centers. Such lessons help students sharpen their ability to solve so-called "word problems," in which a situation first described entirely in common language must be represented in mathematical terms and formulas before a solution can be found.
Stuart and Gates worked with a clothing catalog company in the Midwest and then developed computer logic that might be used to decide when to keep returned items, when to sell them to a discount clothing store, when to donate items to charitable organizations and when to dispose of the items. The logic was used to create a new algorithm, or a step-by-step method to carry out a specific task.
"Mathematical models were run with the current and proposed algorithms and indicate a potential 20 percent reduction in returns processing costs," Stuart said.
Findings from the research eventually will be published in a technical journal, but an added benefit was that Gates was able to develop classroom lessons for her students, who were mostly sophomores. An article about the case studies she developed appeared in the September issue of Mathematics Teacher magazine, a journal for secondary school math teachers published by the National Council of Teachers of Mathematics.
"This is an area high school students can appreciate because many of them have experienced buying merchandise from catalogs," Gates said. "I found that the students were enthusiastic about applying mathematics and thinking skills to a problem that interested them."
Math teachers from around the country have contacted Gates and said they may use the case studies in their schools.
Students are required in the exercises to make management decisions about specific clothing items based on variables such as the number of items returned by customers, the demand for those items, how many of the items already were in a company's inventory, how much it would cost to store the items and how long it would take to receive the items from the manufacturer if they were not kept in inventory.
Similar lessons also could be tailored for high school students taking business classes, Gates said.
The mail-order clothing problem turned out to be more complex than she had expected.
"At first I thought this was a simple math problem, that all we were going to do was determine that you should keep an item in inventory unless it costs too much to put it back in stock and get it ready to sell again," Gates said. "But company managers told us very quickly that customer service is their main issue. So if particular items were on back order, then no matter what it cost, they were still going to process those items and get them out to the customers who were waiting for them."
Customers who buy clothing through catalogs, including online catalogs, often find that sensory-related characteristics such as color and texture are difficult to evaluate until they receive the items, Stuart said.
"This results in fairly high return rates in mail-order clothing sales," Stuart said. "The return center operations can be significant in the quantity of items they process and the cost to process them. So anything that they can do to make those returns processes more efficient and less costly will very much help their bottom line."
The NSF program lasts for one year. Stuart and Gates received an extension to their original grant and have worked together for two years.
"The first year we defined the problem and the process flow," Stuart said. "The second year of the project we developed a more efficient returns process and a more complex returns algorithm so that the company could make better decisions about whether they should store clothing for future sale, send it to a third-party retailer, send it to a charitable organization or discard it altogether."
Because the mail-order clothing business is extremely competitive, the company has requested to remain anonymous, she said.
Writer: Emil Venere, (765) 494-4709, firstname.lastname@example.org
Sources: Julie Ann Stuart, (765) 494-6256, email@example.com
Joyce Gates, (765) 474-2496, firstname.lastname@example.org
Purdue News Service: (765) 494-2096; email@example.com
Note to Journalists: An electronic or hard copy of the article in Mathematics Teacher magazine is available from Emil Venere, (765) 494-4709, firstname.lastname@example.org.
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