Two-Stage Supply Chain Inventory Coordination Strategy with Supply-Hub Operation Mode

It is difficult to control and coordinate inventory of assembly manufacturing supply chain because there are multi-suppliers in control system. In order to integrate different suppliers and send parts packages to production line directly, Supply-Hub is used in practice. Queuing theory and basic inventory strategy are applied to model inventory control of assembly manufacturing supply chain with Supply-Hub mode. And optimization solution for decentralized decision and centralized decision were derived separately. Then coordination inventory strategy is obtained by comparing decentralized decision and centralized decision. Backorder and holding cost subsidy contracts are used for coordination that incites suppliers to set basic inventories in favor of whole supply chain operation cost reduction. And numerical examples of three suppliers and one manufacturer are given to illustrate the effectiveness of the coordination strategy.