An integrated inventory model for supply chain management

Abstract

Improved integration of logistics processes across multiple companies of a supply chain is of increasing interest and importance. With modern information technologies, more and more companies intend to implement a logistics alliance strategy for co-operations in the supply chain. However, the implementation of the strategy highly depends on the integrated logistics models available. To this end, extensions of existing models may be required to facilitate the entire supply chain rather than individuals. Inventory management is one of the most important parts of logistics management. In this project, an integrated inventory model is built for a supply chain with a manufacturer, multiple upstream factories and mul1iple downstream vendors. Based on some assumptions, all the individual inventory behaviours are considered together to suggest an overall optimised plan to minimise the total inventory cost of the supply chain. Then, extensions are made to the integrated inventory model for practical considerations. A numerical analysis is conducted to compare the optimised results of the integrated model with the results of some existing models. Finally, conclusions and future perspectives are drawn.