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Research on Two-echelon Supply Chain Inventory Expenditure Based on Just-in-time

Author: CaiYuYan
Tutor: LiuWenLong
School: Northeastern University
Course: International Trade
Keywords: just-in-time production zero inventory inventory cost safety stock
CLC: F224
Type: Master's thesis
Year: 2008
Downloads: 269
Quote: 0
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Abstract


In recent years, since the competitions between companies are more and more fierce with the rapid development of information technology, the tendency of market towards globalization and of customers’demand towards diversification, it plays an important role to reduce company inventory cost so as to improve the company’s competiveness. The approaching to zero inventory by reducing the inventory cost and stock quantity in supply chain has been paid much attention in inventory management in supply chains.Zero inventory means the quantity of everyday produced stock meets the market’s need exactly. In other words, the stock quantity is zero when the production is finished at the end of the day. In this way of reducing the quantity of stock to zero as could as possible, the aims to save cost and make use of money effectively are attained. Although this is an ideal condition, in practice, we may minimize the quantity of stock by specific strategy to control the inventory in practice.Every company holds safety stock in order to avoid crisis for the uncertainties in production and demand, which may lead to the delay from the company to the customers in supply chains. It is undeniable that the safety stock can reduce uncertain influence factor to company, but this can also increase the inventory cost of the whole supply chain and capital and the effectiveness of the whole supply chain is affected.The present thesis studies the realization of optimized inventory and the minimized stock cost in supply chains by reducing safety stock. All supply chains come down to two-echelon supply chain for the sake of discussion convenience in this thesis. Therefore, the study object of this thesis is a two-echelon system consisting of the supplier and the producer. This study focuses on the conviction of the optimized safety stock on the conditions of the uncertainty demand which is consistent with the exponent distribution and the production in the way of just-in-time implemented by the producer, that is to say there is no failure in the production circle. The supply uncertainty is caused by the suppliers who make mistakes in production. In order to coordinate the relationships between the producer and supplier, the collaborative mechanism of the penalty cost factor and bonus factor are introduced in this paper.Finally, the application of this study achievement to the stock object is given in this thesis.

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CLC: > Economic > Economic planning and management > Economic calculation, economic and mathematical methods > Economic and mathematical methods
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