Base Inventory Cooperation Strategy of Multi-parts with Supply-Hub

Li Shuang-yan, Zhang De-zhi, Jin Fang-ping


We investigate two stage supply chain optimization coordination with Supply-Hub operation mode for assemblymanufacturing enterprise. Because all parts delivery of all suppliers are integrated at Supply-Hub, all neededparts by the production line are selected, packaged and then sent to the manufacturer by Supply-Hub. Weapplied queuing theory and basic inventory strategy to model this system and derive the optimization solutionfor decentralized decision and centralized decision separately. Then coordination inventory strategy is obtainedby comparing decentralized decision and centralized decision. Due to inventory risk shifting from manufacturersto suppliers with Supply-Hub operation mode, backorder and holding cost subsidy contracts are used forcoordination that incites suppliers to set basic inventories in favor of whole supply chain operation costreduction. And numerical examples of three suppliers and one manufacturer are given to illustrate theeffectiveness of the coordination strategy and the condition to gaining Pareto improving for whole system withthe collaborative strategy.

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