Reconstruction of distribution network

Distribution network reconstruction refers to that the adjustment of distribution network caused by the change of original demand mode or external conditions when one or more products produced by one or more manufacturing plants are used to serve a group or groups of geographically dispersed channel operators. This may be happened due to the termination of several existing warehouse lease contracts or changes in the number of channel vendors.

Distribution strategy issues

Distribution strategy is also very important in supply chain management. It adopts direct transit strategy, classical distribution strategy or direct transportation strategy. How many transfer points do you need? Which strategy is more suitable for most node enterprises in the supply chain?

The so-called direct transit strategy means that in this strategy, the terminal channel supplies goods from the central warehouse, which acts as the regulator of the supply process and the transfer station for orders from external suppliers, and does not retain the inventory itself. The classic distribution strategy is to keep inventory in the central warehouse. On the other hand, direct transportation strategy is relatively simple, which refers to a distribution strategy in which goods are transported directly from suppliers to terminal channels.

Inventory control problem

Inventory control questions are as follow. How much inventory should a terminal channel hold for a particular product? Should the order quantity of the terminal channel be greater than, less than or equal to the forecast value of demand? What is the inventory turnover rate that the terminal channel should use? The goal of the terminal channel is to decide at what point to order another batch of products and how many products should be ordered in order to minimize inventory ordering and custody costs.