Supply chain coordination through effective multi-stage inventory linkages in a JIT environment

We develop a mathematical model, with the objective of cost minimization, for coordinating the replenishment decisions for procurement, production and distribution inventories, associated with a single product, in a deterministic, multiechelon supply chain environment. Such coordination is achieved by linking the inventories at the different echelons of the chain through integrated decision making. The supply chain structure examined here consists of a single manufacturer with multiple retailers and suppliers. For attaining the model objective, we suggest a heuristic two-phase solution algorithm, which is illustrated via a detailed numerical example. Furthermore, a number of additional problems, incorporating a variety of parametric configurations, are solved for examining and exploring some salient characteristics of the solutions obtained. (C) 2007 Elsevier B.V. All rights reserved.