Research On Telecom Operators’ Two-Echelon Inventory System Modeling And Application With Consignment Stock

As the items in stock are usually of high unit price and high annual consumption in telecom operators, it is very necessary to develop a theoretic model for analyzing and optimizing the inventory control decisions to aviod the inventory sluggish risk and loss of out-of-stock.The paper proposes a new two-echelon inventory system model to better characterize the inventory control mechanism and operation processes in the unique context of telecommunications industry. Consignment Stock (CS) is taken into consideration for it has been a popular inventory control approach and has been widely employed in telecom operators. The model is applied to determine the optimal stock policy and examine the potential benefits of consignment stock policy. This model helped the telecom operators to reposition their inventories in the supply chain so as to reduce the total inventories and minimize the system-wide cost while does not bring down the service performance. Specifically, it is to decide the inventory control parameters (safety stock level and its distribution, optimal order quantity and optimal replenishment cycle) to achieve the inventory-distribution coordination.As a validation of the model, we demonstrate its successful application by two main most common items in stock of three branch companies of a prevailing telecom operator. In particular, some management insights are given:Numerical studies indicate that the CS policy has a strategic and profitable impact on items toward inventory consolidation and the proposed model may support initiatives which aim on increasing the efficiency of the supply chain as a heuristic planning tool.