A decision support system for improving performance of inventory management in a supply chain network

Purpose – This article seeks to present a decision support model for improving supply chain performance. The model aims to provide a holistic view of the supply chain as an integrated system by analyzing inventory options to facilitate the decision‐making process by business partners in the system. Design/methodology/approach – In recent years, organizations have focused on incorporating both internal and external business activities of their supply chain into an integrated system. The goal of integration of all supply chain activities is to maximize total systems performance while minimizing costs. Literature review and professional experience in the field provided the foundation for the model development in this research. Findings – The article demonstrates the usefulness of a decision support model in analyzing and developing a cooperative environment among supply chain members in order to reduce the cost of inventory as well as the cost of goods sold. The effects of utilizing such tools as just‐in‐time and electronic business systems are illustrated and discussed. Research limitations/implications – The proposed model demonstrates disadvantages of individual optimization in an integrated supply chain system as well as the advantages of collaboration of supply chain members in finding the minimum cost. The model uses one manufacturer with multiple retailers and distributors. Future research in this area could expand the model to allow multiple manufacturers. Practical implications – The decision support model allows decision makers along the supply chain to employ a series of what‐if analyses to evaluate different scenarios with regard to lowering the cost of products reaching the consumer. Originality/value – The model developed in this paper provides the foundation for future research as well as support for decision making when various decision makers are involved.