Commitment works on inventory turnover in supply chain: Evidence from empirical data

Abstract

We propose a retailer's inventory replenishment policy to cooperate with suppliers in a periodic review. The retailer shares an advanced replenishment plan based on demand forecast with the supplier and commits cumulative periodic order quantity of the same planning horizon with advanced replenishment plan within range of a lower and upper percentage of the planned quantity. Using a year sales data of products with different delivery-lead-times and ordering cycles from a leisure food retail chain store in China, We contrast this policy through simulation with the store's previous policy in terms of inventory turnover performance and the error between stock level and actual demand. The result shows that the new policy can effectively improve the performance measures.