Supply chain inventory model with Markov chain demand

Abstract

This study aims to develop a new one-vendor multiple-buyers integrated inventory model. We believe that our proposed model can forecast the demand of all buyers in the coming future by using data that have already existed and to minimize the total cost-for both buyers and vendors. In recent days, the Markov chain approach has played one of the critical methods of demand forecasting in the Supply Chain Management (SCM) field. The proposed model of this study is to analysis the demand of all buyers in one specific season that was impacted by the demand in the same season from last year. Finally, the results of this article discover the most optimal number of buyers and shipments, and the quantity of demand per period. Furthermore, a sensitivity analysis is also conducted to find out the sensitivity of the new model.