Research On Model For Multi-echelon Inventory System With Stochastic Demand And Random Lead-time

According to existing data, about35%percent of the total cost is distributed onsupply chain, and20%-40%percent of the supply chain cost is distributed on inventorycost. Inventory management has become one of the most important elements of modernenterprise management. Under the mode of supply chain inventory management,upriver enterprises and downstream enterprises in the supply chain form a multi-echeloninventory system. In the multi-echelon inventory system, each enterprise’s order policy(that is, reorder point and order quantity) will directly affect the costs and profits of theenterprise, and also restricts the performance of the entire supply chain. Goodmulti-echelon inventory strategies can effectively enhance the market competitivenessof the entire supply chain, so that every enterprise of the supply chain will benefit by thejoint inventory strategy.Currently there are many researches of multi-echelon inventory strategies, thesestudies are based on different assumptions. To a certain extent, substantive progress hasbeen made based on these assumptions given in these multi-echelon inventory studies.But on the other hand, still there are some deficiencies in these studies. Most of the pastmulti-echelon inventory strategy studies are based on stochastic demand and fixedlead-time or fixed demand and random lead-time, which overlook the objectiveexistence of lead-time uncertainty and demand uncertainty. Now also there are somestudies based on stochastic demand and random lead-time, but these studies exists somelimitations.①The definition of the component of lead-time uncertainty is fuzzy.②Exciting studies ignore enterprises’ preference of length of the lead-time, and alsoignore the effect of the length of lead-time to total supply chain efficiency.③Excitinginventory strategy studies are confined to two-echelon models. There is little study onthree-echelon model and multi-echelon model.This paper will establish a model for two-echelon inventory system with stochasticdemand and random lead-time. This model is composited with one distribution centerand several retailers. Retailer’s lead-time will be divided into three parts: distributioncenter’s order managing time, transportation time from the distribution center to eachretailer, and the order waiting time caused by the stock out of the distribution center. Also, this model will bring in the effect of the length of lead-time to total supply chainefficiency, and bring in the punishment cost caused by the lead-time. On this basis, thispaper will build a new target function, and give the optimization algorithms of thismodel. And also, this paper will give the veracity of this two-echelon inventory modeland the sensitivity analysis of parameters used in the model.Base on this model for two-echelon inventory system with stochastic demand andrandom lead-time, this paper will establish the model for three-echelon inventorysystem with stochastic demand and random lead-time, and give the optimizationalgorithms of this model. Also, the numerical analysis of this three-echelon inventorymodel will also be given in this paper.