Study on Two- echelon Centralized Inventory Management Based on Supply Chain

Abstract

The research of multi-echelon inventory started by Clark and Scarf in 1960, they point that the optimum inventory management strategy is maximum ordering strategy. Since then, many researches of inventory management based on supply chain are done, they can be summarized and separated into the following kinds: (1) Production -Inventory System. (2) Inventory-distribution system. (3) Production-Inventorydistribution system. (4) Inventory distribution. Based on the article’s characteristic and demand from downstream of the supply chain, the inventory management is studied from the angles of raw material inventory and finished goods inventory by using inventory and centralized inventory theory. There are two ways of multiechelon inventory management, they are decentralized inventory strategy and centralized inventory strategy. Decentralized inventory strategy aims ultimately at inventory optimization of single enterprise or sector, it is usually secondary to the overall optimization of the whole supply chain. Centralized inventory strategy takes the link among all inventory control parameters into consideration, and then the integrated optimization of the whole supply chain can be achieved. Reference researches centralized inventory strategy, game inventory strategy and outsourcing strategy from the aspect of manufacturer, and finds the optimal level and applications of each strategy. References multiechelon inventory with a center warehouse. A inventory management model is built in order to make the optimize inventory management strategy of centralized inventory. References research SPP problem based on price discount, it supposes that order quantity and the practical demand are known. Through empirical analysis, this paper proves that it is practical to optimize order quantity and price by joint decision strategy. These researches are based on multi-echelon inventory theory of supply chain and manage inventory through joint strategy. These researches adopt the same inventory strategy in all kinds of inventory without considering the different needs in different situation, so they aren’t confirm with the actual production. As to this problem, this paper researches the two-echelon inventory in different