A Consignment Policy for A Supplier-Retailer Inventory System

摘要

In this paper, a consignment policy is proposed to manage inventories in a supply chain system involving a supplier and a retailer. The periodic review policy is adopted by both parties to control the inventory level in order to satisfy the deterministic demand coming from end customers. An iterative procedure is applied to search the optimal review period, safety stock and retailer's selling price so the joint total profit can be maximized. A numerical example is also provided to illustrate the application of the model and to show the performance of the proposed models. The result shows that the proposed model results a higher joint total profit compared to the model without consignment policy. This concludes that the inclusion of consignment policy in inventory management gives significant benefits to supply chain.