| Summary: | One of the common goals which most companies have is to maximize profits. There are two way to increase profit: increasing revenue or reducing cost. Lacking of ability to keep the cost down could potentially drive the companies out of the business. In recent years, many researchers have been paying more attention on improving supply chain system due to high potential of creating cost savings. The supply chain network considered in this research is a tree-type, three-echelon single producer, multiple distributors, and multiple retailers system. The goal of this research is to develop a replenishment policy which satisfies customers demand and minimizes the total production-inventory system cost. Three inventory models are developed here. First, tree-type, three-echelon distribution (producer, distributor and retailers) model with end customers backorders (TDB) at retailers level is developed. Second, the variation of downstream holding cost (DHV) is studied and a model is developed to investigate the effect downstream holding cost structure. Third, a model is developed to improve the retailers service rate (ISR). This model combines the features of TDB and DHV models together (allowable backorder and reduced delivery interval at retailers level). Operational schedules of TDB are constructed and the limitations of DHV model are established. The improvement in the ISR model is confirmed and demonstrated through numerical examples. Significance and conclusions of this research are highlighted along with an indication of future research.
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