Purpose – The purpose with this thesis is to examine how items can be distributed between stores inventory and an external warehouse. To achieve the purpose criteria that should be considered, how these can be prioritized and used when distributing items between stores inventory and an external warehouse will be examined.

Method – The study started by an examination of the theory that already exists within the subject. The already existing theory has then been examined in reality, on the furniture company IKEA Jönköping, where a case study with one channel has been performed. Empirical data has been collected by interviews with the persons involved in the distributing process, observations of the distributing process and by documents taken from IKEA Jönköping’s system. The empirical data have been compared and analyzed with the available theory. Also an interview with a well established retailer in electronics industry has been performed, whose distributing process has been compared to IKEA Jönköping´s process.

Findings – The criteria identified include what sales rate the item has, which product family the item is included in, what size the item has and if items have similar properties. Priority can be given differently depending on which item it is about. The distributing process is dynamic, which means an item that has been given a certain place in the warehouse may not keep the place in the future. The process is dynamic since the criteria constantly are changing. Guidelines of how the distributing process should be performed have been developed.

Implications – This study provides knowledge and insight on how items can be distributed between stores inventory and an external warehouse and what criteria that the distributing can be based on. It already exist some theory within the subject and this study may contribute to further theory. Companies should ensure which items to be placed, how they are related to each other and their condition.  

Research limitations – The technique of collecting empirical data complemented each other well but one thing that can be criticized is the number of observations that has been performed. In this study only one observation of the distributing for each warehouse has been performed. The results of these observations have then been compared with the results of the interviews. Suggested one more observation of distributing for each warehouse could have been performed to ensure that the process is performed consistently. A further shortage with this study is the choise of a single case study. To be able to draw generalized conclusion a multiple case study had been more appropriate.