Inventory Model Optimization Under Supply Chain Finance

With the advent of the Supply Chain Financing, the Supply Chain Management has evolved from the traditional Logistics-Information flow management to the more current Logistics-Information-Financing flow management. The SMEs (small and medium sized enterprises) lack the real-estates demanded by the traditional loan procedure and it is very difficult for them to get enough supporting loan from the banks. Besides, as the SMEs lies in a comparatively weak position on the supply chain, they usually have to accept some unfair contract terms which harm their financial situation. A large part of the disposable fund of SMEs is occupied by their inventories, which even worse the fact that the SMEs are often exposed to the financial problems. The inventory financing, a basic service of the Supply Chain Financing, however, helps to mitigate the situation and the SMEs are able to get enough financial support thanks to the inventory financing. The traditional inventory management models should be modified in order to better cope with the real inventory systems.Several traditional inventory models were analyzed. They were categorized based on whether the customer demand is fixed or at random. A new inventory model with inventory financing based on the Newsboy model was studied. One model for single product inventory management and the other for multiple products inventory management were established. The multi-period discounting strategy was adopted in the model as it made the model even more realistic. The objective of the model was to decide on the optimal purchasing quantity so that the enterprise could get the maximized profit.