SD-based Inventory Optimization Of Warehouse Supermarkets Under Supply Chain Management Models

The warehouse supermarkets have emerged as a new retail concept in China over the recent years, which is characterized by a business model integrating warehousing and sales functions while offering both wholesale and retail services. Under a supply chain management context, the warehouse supermarkets have to adopt systematic and holistic approach in analyzing the rapid logistics and information flows along the entire supply chain in order to deal with fierce competition. As inventories exist throughout business activities including procurement and sales, the cash flow and sales revenue of the supermarket operators are hinged upon inventory levels. Therefore, the study of inventory system in the context of supply chain management holds great significance for their operations and management.The basic principles and modeling methodologies of System Dynamics (SD) are applied in the study of inventory systems in the paper. The object of the study is the supermarket warehouse inventory systems under Vendor Managed Inventory (VMI) and Jointly Managed Inventory (JMI) models.The paper starts with an analysis of business management processes for inventory systems, followed by a systematic overview of SD theories and modeling processes. On this basis, the paper conducts system boundary analysis and system cause-effect analysis of the inventory systems under VMI and JMI models. Using the concept and methodologies of SD, the modeling and simulation software VENSIM is applied to develop models for supermarket warehouse inventory systems. Based on operations and sales data from 2 supermarkets, SD models for multiple scenarios are developed. The inventory optimization suggestions are offered based on simulation results.The paper applies general SD analysis over real-world corporate storage links to the study of specific inventory systems at warehouse supermarkets by conducting multi-solution simulation analysis based on relevant SD models. The analysis of simulation results is made to offer effective suggestions in inventory optimization at warehouse supermarkets from the perspective of supply chain management.