Research on Inventory Sharing Policy in Assembly System with Random Demand Time

Abstract

This paper investigates the inventory sharing policy in an assembly system with random demand time. A Stackelberg game has been built in a similar supply chain setting: manufacturer first decide the length of time period that for supplier taking charge of the inventory, and then followed by supplier chooses a best deliver time to manufacture. The research not only finds out the optimal decisions for both parties but also provide a relatively simple mechanism to achieve the supply chain coordination. The result shows that comparing to the traditional VMI policy, inventory sharing policy is always a better choice no matter for the supply chain or the manufacturer.