Research on model of supply chain inventory coordination and optimization

The traditional inventory management dominantly pays attention to the internal inventory control of business, and is neglectful on supply chain coordination and partnering. The local optimization management mode results in impeded logistics, cost increase, lack of business and supply chain competitiveness. Supply chain coordination and partnering become significant means to improvement of supply chain performance, enhancement of business competitiveness. This paper makes some beneficial approaches to the inventory coordination and its value of the two_stage supply chain under indeterminate supply and demand through model research. Under period review replenishment, the paper introduces concept of effective inventory level, which represents upstream shortage's influence on downstream inventory, models the inventory of suppler and buyer, and globally optimizes safety factor to reduce supply chain inventory cost. Meanwhile, authors present the realization mechanism of safety factor's global optimization, and make sensitivity analyses on value of global optimization.