Investigating Inventory Strategy Under Demand Distribution Fluctuation in Dual-Channel Supply Chain

When manufacturers construct a dual-channel distribution system, which includes online and offline sales channels, they need to solve the inventory management problem to ensure supply and reduce inventory costs of the supply chain system. The dual-channel supply chain is the research object, and the inventory decision model is designed to achieve optimal profit when market demand is divided into online and offline demands. The results of the numerical analysis and simulations, conducted using MATLAB, indicate that both the manufacturer and the retailer increase their inventories and that their profits decrease when demand uncertainty increases. Besides, the increase in the online demand ratio causes the increase in the manufacturer's inventory and reduces the profits of the retailer and the entire supply chain.

Automated summary

When constructing a dual-channel distribution system, manufacturers need to address inventory management to ensure supply and reduce costs. Research shows that increased demand uncertainty results in higher inventory levels for both manufacturers and retailers, leading to decreased profits.