Inventory Control and Replenishment of Multi-Product Multi-Echelon Based on Time Cost Under JMI Environment

Inventory Control and Replenishment of Multi-Product Multi-Echelon Based on Time Cost Under JMI Environment

Zhi Chen (School of Business Administration, Hunan University, Changsha, China), Chao Ren (School of Business Administration, Hunan University, Changsha, China), Ren-long Zhang (School of Business Administration, Hunan University, Changsha, China) and Mi-Yuan Shan (School of Business Administration, Hunan University, Changsha, China)
DOI: 10.4018/japuc.2013040103
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Abstract

Joint managed inventory is an advanced supply chain inventory management tool, which will effectively tackle the complicated problem between the inventory cost of supply chain and service level. The research on inventory model and its’ control under JMI environment is a hot issue at present. In this paper, the authors deeply discuss the question of the inventory time costs about the multi-product and multi-echelon control model and its’ replenishment strategy under JMI environment. With considering the foundation of JMI and time cost, the authors propose the multi-product multi-echelon inventory cost control model under time cost. Then formulate corresponding replenishment strategy. At last, through a numerical example, the authors discover that the multi-product multi-echelon joint inventory management based on time cost can effectively reduce the total inventory costs and improve the competitiveness of the entire supply chain.
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1. Introduction

With the continuous developing of the theory and practice about supply chain management inventory, joint managed inventory as a new supply chain inventory management mean arising at this moment. It is developed on the basis of VMI and unified power, responsibility, profit balance and risk-sharing between the upstream and downstream enterprises’ inventory management mode. JMI emphasis on the node enterprise in the supply chain to join in the cooperation, map out an inventory plan at the same time. It makes each node enterprise in the supply chain consider from mutual coordination and keep the forecast of demand in different enterprises consisting in order to slack the “bullwhip effect”. At present, many scholars doing a lot research on the mode of JMI and the replenishment strategy. However, the research literature of time cost are scarce and most of them just introduces the concept of joint managed inventory, do not give a specific mathematical model to optimizing and rarely consider the effect of time cost to inventory costs. Most of the arguments are confined to a single product or two echelon hypothesis, but actually operation of the enterprise often involves the multi-product inventory management. So this paper which aiming at multi-product multi-level inventory management not only has theoretical meaning, but also practical application value.

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