Management Review

Management Review ›› 2023, Vol. 35 ›› Issue (6): 275-287.

• Operation Management • Previous Articles     Next Articles

Robust Optimization-based Inventory Level and Allocation Strategy for Sharing Platform under Service Level Constraint

Qiu Ruozhen1, Ji Yuanyuan1, Shao Songshi2   

  1. 1. School of Business Administration, Northeastern University, Shenyang 110169;
    2. College of Naval Architecture and Ocean Engineering, Naval University of Engineering, Wuhan 430033
  • Received:2021-08-12 Published:2023-07-27

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Abstract: Assuming there is a supply chain composed of a single inventory sharing platform and multiple retailers, this paper studies the optimal inventory level and allocation strategies of the inventory sharing platform with and without demand information sharing. A robust optimization model is established, with the retailer's service level constraint taken into consideration and only demand mean and variance information known. Under the condition of information sharing, the inventory sharing platform can accurately obtain the retailers' demand mean and variance. The retailer's service level constraint is transformed into an easy-to-handle chance constraint problem. Under that condition, the optimal inventory level and allocation strategies are deduced, and the changes of the strategies with the changes of the related parameters are analyzed. Under the condition of not sharing demand information, the inventory sharing platform only knows the uncertain set of the retailers' demand mean and variance. In particular, the ellipsoidal uncertain set is used to describe the mean and variance of uncertain demand, the dual theory is used to transform the inventory optimization model and studies are conducted to analyze the impact of information sharing on the optimal inventory level and allocation strategy. The results show that, under different information conditions, the inventory level of the inventory sharing platform increases with the increase of the mean, variance and service level requirements; the information shared by the retailers has a positive impact on the inventory optimization of the inventory sharing platform, namely, the better information sharing among the retailers, the lower inventory level on the inventory sharing platform; when the retailers do not share information, the inventory level of the inventory sharing platform increases with the uncertainty of mean and variance increases, and the uncertainty of mean has a greater impact on the inventory level.

Key words: sharing platform, inventory allocation strategy, service level constraint, robust optimization, information sharing