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The IUP Journal of Supply Chain Management :
Arrangement of Inventory Policies in Four-Echelon Supply Chain for Minimization of Inventory Variance
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A model is built in order to study the impact of variance of demand on the supply chain inventory and also to identify the best combination of the inventory policy across the supply chain. Inventory management at independent entities is to either prevent stock out or for having lowest funds locked up. This might result in either higher inventory holding or stock out across the supply chain. Simulation study was undertaken on four-echelon supply chain. With the demand varying from 10% to 70%, the best combination inventory policy had a supply chain inventory variance (standard deviation) varying from 11.5% to 18.9% respectively. Demand flow policy at retailer, manufacturer and supplier with s,Q policy at wholesaler would result in the least standard deviation of inventory across the supply chain for low demand variance product. Similarly, s,Q policy at retailer, supplier and s,S policy at wholesaler and demand flow policy at manufacturer are the optimum set for having least standard deviation of inventory across the supply chain for high demand variance product.

 
 
 

There is increment in the integration of economies around the global, logistics forming one of the vital factors. Advancement in technology has made logistics sector to facilitate the movement of physical goods across the globe. The transfer of physical goods across globe has exponentially increased. Availability of cheap resources and human capital in developing nations has turned these locations into manufacturing hubs. All the major business conglomerates have increased their dependency on the suppliers from both the developed and developing nations (de Meijer and de Bruijn, 2013).

Supply chain integrates all the stakeholders from the supplierís supplier to the customerís customer. Value addition to the product happens at each entity across the supply chain. Inefficiency of any single entity would get incorporated in the final product either in terms of cost or quality.

 
 
 

Supply Chain Management Journal, Arrangement of Inventory Policies, Four-Echelon Supply Chain for Minimization, Inventory Variance