Coordinated replenishment with information sharing between two suppliers based on supply-hub

In assembly system, the backorder of any component not only delay the delivery of final products, but also make the inventory turnover of the matching components worse. In addition, that exerts negative influence to the operations of suppliers who are related with those matching components. All of that would incur extra holding cost. We study a suppliers coordinated replenishment policy, which based on milk runs with the supply-hub. Using that policy the total costs of supply chain can be optimized by reducing the extra holding cost, which happened in the manufacture process due to the shortage of component. Suppliers coordinated replenishment policy model is developed and compared with the traditional replenishment policy model in this paper. A numerical study is also presented to illustrate the effectiveness of this coordinated replenishment policy.