Title: An optimal inventory model based on postponement strategy: a bilevel programming approach

Authors: Niu Baozhuang, Gui Shouping, Zhang Zhiyong, Li Xinghua

Addresses: College of e-Business, South China University of Technology, Guangzhou, 510006 P.R. China. ' College of e-Business, South China University of Technology, Guangzhou, 510006 P.R. China. ' College of e-Business, South China University of Technology, Guangzhou, 510006 P.R. China. ' College of Electric Power, South China University of Technology, Guangzhou, 510640 P.R. China

Abstract: In order to reduce risks and costs, manufacturing enterprises turn to the postponement strategy to meet differential demands of customers: this is helpful to enhance the customer service level, and this is also helpful to achieve the goal of maximising the inventory profit. Under this assumption, inventory batch allotment shows new features; therefore, the paper proposes an optimal inventory model based on the postponement strategy, which includes the framework model and the decision-making model. Firstly the framework model is discussed, and its efficiency is verified. Secondly, the decision-making model of inventory batch allotment is established with a bilevel programming approach, which considers the manufacturing supply chain as the coordination centre, and also the coordination and optimisation between the profits of the whole supply chain and the local branch manufacturing points. The decision-making model is then calculated and verified using the investigation data. The decision-making model is proved to be efficient in giving a reasonable allotment of supply chain inventory batch, and it also provides an effective decision-making tool supply chain coordination.

Keywords: postponement strategy; inventory batch allotment; bilevel programming; chaos optimisation; mass customisation; inventory modelling; decision making; supply chain inventory; supply chain coordination; supply chain management; SCM.

DOI: 10.1504/IJMASSC.2008.017147

International Journal of Mass Customisation, 2008 Vol.2 No.3/4, pp.341 - 357

Published online: 15 Feb 2008 *

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