Research On Inventory Cost Model Of Tri-echelon Supply Chain Based On Information Sharing

The 21st century, not only bring rapid development of economic globalization, but also increase the intensity of competition in the market. The focus of competition between enterprises has been not only the competition between the enterprises, and more into the supply chain and supply chain competition. In the process of supply chain management, inventory management is a very important content, inventory is the biggest obstacle to supply chain management, it not only affects the level of the comprehensive cost of a single enterprise, but also restricts the performance of the entire supply chain. Traditional supply chain inventory management is manufacturers, distributors and retailers to manage their own inventory and to develop their own orders policy.The upstream companies only meet passive downstream business orders, and all companies are pursuing the largest interests of the enterprise itself.However, due to various components of an enterprise inventory management strategy is different, when consumer demand changes in the supply chain downstream, this demand signal will be amplified along the supply chain.In turn,it leads inevitably distortions of information, namely, "bullwhip effect" . Ultimately, it makes supply chain inventory costs increasing, so it does not facilitate supply chain optimization goals.As the supply chain "bullwhip effect" increasingly affecting the entire supply chain performance, enhancing supply chain collaboration and coordination between enterprises has become a necessity. Furthermore,as more and more companies are relying on their business partners or suppliers , the coordination of activities through supply chain becomes critical to the improvement of performance. Information sharing and collaboration is one of the most important approaches. So the study for the information sharing problem in the supply chain management is very necessary for improving the level of the supply chain achievement.This paper researched supply chain inventory issue from the following five sections.The first part according the existing literature on the comprehensive analysis and comment, we found it was very few related research on the Tri-echelon supply chain, so it is rather instructive for us to research on information sharing in the Tri-echelon supply chain to make whether it is essential for supply chain companies to establish information sharing in the Tri-echelon supply chain.This study provided the basis for model selection for the enterprises in actual management decisions. And the paper proposed research methods and research details.The second chapter is the related basic theory of this paper. It Introduced the definition of supply chain and supply chain management, inventory and classification of inventory , the strategies of inventory management ,inventory control model used in this paper ---- Economic Order Quantity model and inventory management strategies .Of these,inventory management strategies include: (1) (Q, R) inventory control policy; (2) (R, S) inventory control policy; (3) (t, S) inventory control policy; (4) (t, R, S) inventory policy. Finally, the part described the content of information sharing and the links between information sharing and inventory management,it provided a theoretical basis for the third part to establish model.The third chapter, we first defined the research objects of model and eight basic assumptions, and explaind the Little's law, Poisson distribution, Erlang distribution, Normal distribution. After introducing the role of members in the Tri-echelon supply chain and inventory management strategies, it determined the components of the Tri-echelon supply chain inventory cost.The retailers in the Tri-echelon supply chain is the terminal node, where it is to get goods from the distributors.The average intensity of the retailers'demand obey the Poisson distribution,and the intensity isλ.It used continuous check inventory control strategy(Q r , Rr ).Distributor is the retailer's upstream business,the second part in the supply chain nodes.And the manufacturer allocateds reasonably products to retailers throughout the distributor.Distributor also takes continuous check inventory control strategy to order goods from manufacturers, the interval between the arrival time of orders subject to Erlang distribution. Manufacturer is the core business of supply chain, has a very large production capacity, but there should be some safety stock to meet the needs of distributors.The fourth chapter ,based on the assumptions of the study for manufacturers, distributor and retailers,we established the manufacturers, distributor and retailers of their respective cost model under the traditional model (non-information-sharing environment) in the Tri-echelon supply chain, two-level supply chain (distributor and retailer(s)) information sharing and Tri-echelon supply chain(manufacturer, distributor and retailer(s)) information sharing.According to this study, we found the total cost of the Tri-echelon supply chain model in the traditional mode:We found the total cost of the Tri-echelon supply chain model in the two-level supply chain (distributor and retailer(s)) information sharing mode: We found the total cost of the Tri-echelon supply chain model in the Tri-echelon supply chain(manufacturer, distributor and retailer(s)) information sharing mode:The fifth chapter is the focus of this study and research purpose. We compared the total supply chain costs among the traditional, Two-level information sharing and Tri-echelon information sharing supply chain modes through numerical analysis, to detect manufacturer, distributor and retailer's costs changes , as well as the total cost of the supply chain changes under three modes. It was indicated that, regardless of the grade supply chain information sharing , supply chain total costs are lower than under traditional. The degree of information between supply chain enterprises and facilities having been more complete, and they having been achieving better co-operation agreement, the Tri-echelon supply chain information sharing may be superior. Otherwise, the Two-level supply chain information sharing would be more manageable and bring the best comprehensive performance.The sixth chapter, we choose FAW Automobile Co.Ltd. as the empirical analysis to verify the practicality of the model.