Inventory Coordination Decision For Distribution In Supply Chain Under Demand With Substitution

At present, the research focus of supply chain has been transferred from procurement and manufacture to demand. Supply chain turns to distribution system from demand chain driven by market and order. Distribution system research mainly focuses on the following areas: distribution cost calculation and optimization under different inventory control strategy, developing new order strategy to reduce the complexity of inventory treatment of upper members, a variety of inventory allocation strategy when the lower members'orders exceed the existing inventory of upper members. In all three study areas, multi-product distribution system with alternative is seldom involved. This article studies the issue. The following are main contents and results of the study.Firstly, the background and significance of two-way substitution's stock coordination in distribution supply chain are analyzed. Then research literature is reviewed from the point of two-way single-stage stock and substitution's stock coordination in the supply chain. And the idea, research route and main content of the paper are proposed. Secondly, the concept of supply chain system structure, distribution system structure, substitution and its classification are introduced. Game between supply chain members and supply chain stock coordination mechanism under replacement demand is discussed, as well as inventory control.Thirdly,shopkeeper are hypothesized to sale both alternative product and non-alternative product. The best order quantity under irreplaceable case is obtained. With the largest profit goal, sufficient condition of the best ordering strategy for two-way alternative two products under random demand is deducted. The research is about two-way substitutions'stock problems under the two-tier distribution system of supply chain composed by one or multi-retailers and two suppliers. Two-way substitutions'order policy under the random demand is discussed. The result proves the existence of a balanced solution to Stackelberg Game when two suppliers price at the different time. Pure strategy Nash equilibrium when pricing at the same time to form a static non-cooperative game is obtained. The optimal order quantity and wholesale price of two-way alternatives is obtained by example analysis.Finally distribution system of Coca-Cola and Pepsi-Cola are chose as the example. The two companies'products and their distribution system are analyzed. Their stock data is collected and applied into the model. Based on the above analysis, the existing problems and corresponding solutions in distribution system of supply chain are proposed.