Multi-Product of JMI under BOM

Multi-Product of JMI under BOM

Chen Zhi (School of Business Administration, Hunan University, Changsha, China), Ren Chao (School of Business Administration, Hunan University, Changsha, China) and Shan Miyuan (School of Business Administration, Hunan University, Changsha, China)
DOI: 10.4018/ijapuc.2014100101
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Abstract

JMI is an advanced inventory management method, how to implement JMI to reduce overall supply chain inventory cost and how to undertake profit allocation is a hot topic in the study of inventory management. But the current study rarely considering BOM, much less BOM's impact on supply chain inventory cost under the multi-product environment. This paper studies the two level supply chain including single manufacturer and multi-supplier of multi-product, and analyzes the BOM of multi-product, then propose a multi-product JMI model based on BOM and use a numerical example to demonstrate its validity.
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2. Description Of Multi-Product Bom Of Manufacturing Firms

In practice, manufacturing enterprises order a variety of raw materials for the production, at the same time order from multiple suppliers. The supplier does not know the manufacturer's actual demand for raw materials due to the existence of asymmetric information. The demand will be amplified in the process of information transmission from raw materials to suppliers since the order sends, leading to out of stock or inventory redundancy phenomenon, and it will not only affect the production of manufacturer, but also reduces the overall efficiency of the supply chain. According to the statistics of Chinese scholar Ma shi-hua, upstream to the downstream enterprise in our country can’t be timely and accurate delivery accounted for 18.53%, unsatisfied occupied 2.33%. We can infer that the synergy degree between manufacturing supply chain is very low and it is difficult to realize information sharing, resulting in overall low inefficiency of supply chain.

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