Optimal Production And Inventory Policy For New Product In The Supply Chain

In the increasing of business competition, a right developing strategy in every firm must be put forward according to the current situation of macro-environment and industrial market in order to keep highly competitive competency. They realize their advantages by way of strategic analyzing such as SWOT Matrix. Then they retreat from the market that is their weakness and develop a new business in which they have advantage. In the developing of a new business, firm face three kinds of product as follows:(1). Firm develops a new product in his own but that has existed in market for long. (2). Firm develops a new product in their country but that has existed in the foreign market. (3). Firm develops a new innovation product that has not existed in market before. All these products is called as new products in this paper.Firm faces tow problems in the introduction of new product. Firstly in the process of production workers are unfamiliar with the new product and process, which result in inefficient of production. Secondly customers do not recognize and accept the new product, and firm is lack of experience in marketing of new product. Further more firm faces the problem of unspecific product line and low level automatization besides these previous problems. We can say, almost all literature results of production and inventory in supply chain are not suitable for new product. Therefore our research on optimal production and inventory policy for new product in supply chain has the significant and comprehensive application in practice. It is the precondition of study production policy in supply chain that designs supply chain for new product. New product is dynamic in technological innovation. It is uncertainty in demand at the entering of market. So responsive supply chain is the main characteristic in its structure design that is improving cycle of design, feedback and redesign. Optimal production and inventory policy in supply chain of new product must consider the characteristic of production and demand. When the dynamic process of production and demand can be forecasted by means of learning curve equation, dynamic programming is the proper method to get the optimal policy. Otherwise demand is stochastic, Newsboy model is employed here to keep balance between the backorder cost and inventory cost in order to find the optimal policy that minimizes the total cost. This paper is focus on the new product, witch supply a gap of general production and inventory policy in supply chain. The main conclusion of this paper is dynamic production policy instead of static under the introduction of new product. The development of manufacture automatization and information technique is the strong support to the dynamic production planning. The result of this research is not only economy of resource but also applicable in practice.