Horizontal inventory coordination in supply chain based on multi-objective genetic algorithm

Abstract

In this paper, under the circumstance of uncertain customer demand, the enterprises on the same node in multiple supply chains conduct horizontal inventory coordination according to their own inventory and demand. Based on the combination of horizontal inventory replenishment and vertical normal replenishment, the related mathematical model has been established. By studying the inventory strategy in the decentralized and centralized decision-making, the dual marginalization effects are found in the network system composed of multiple supply chain. So the revenue sharing contract is introduced to solve this problem. It has been found in the study that after adopting the horizontal inventory coordination mechanism of the supply chain, the profit of the members in the supply chain system and the overall profit of the system are both higher than those which didn’t adopt the mechanism. The improved multi-objective genetic algorithm is used to calculate and verify the problem. In particular, after the revenue sharing contract is adopted, the profits are further enhanced.