A Study on the EOQ Model under the Environment of Virtual Organization

This paper firstly describes the definitions of stock and virtual organization (VO), then gradually show the importance of inventory management under the environment of VO. Although the classical model of Economic Order Quantity (EOQ) is widely used in the inventory management of traditional enterprises, it's not applicable to VO. As an integrated system composed of two or more traditional enterprises, VO is quite different from those traditional enterprises. When it comes to the problem of VO's inventory management, it's necessary to take both the interests of suppliers and demanders within the VO into consideration. Therefore, this paper dwells on the differences of EOQ Model between traditional enterprises and VO. Further, a modified model is proposed based on integration theory and system theory. Finally, it puts forward some inspirations and suggestions accordingly, in order to maximize the interests of the whole group and raise the enterprise's economic efficiency.