A System Dynamics Model of Multi-item Replenishment in Two-echelon Supply Chain

This paper considers the multi-item replenishment in two-echelon supply chain network with two manufacturers and two retailers. Each manufacturer provides one different product for two retailers. The traditional replenishment model is that each manufacturer supplies products for two retailers respectively. We propose a joint replenishment model in which third-party logistics provider (TPL) deals with the replenishment and dispatching for two retailers instead of manufactures. Adopting the theory of Automatic Pipeline, Inventory and Order Based Production Control System (APIOBPCS), a system dynamics model is designed to simulate the process of joint replenishment. As the simulation results shown, the joint replenishment model compared with the traditional replenishment model can effectively reduce the inventory of manufacturers and retailers and obviously improve customer service level of retailers.