The Product Life Cycle (PLC) is based upon the biological life cycle. Through the period of development it is introduced or launched into the market, and the change of sales, the product will experience sprout, maturity, shrink and even die out. The classic product life cycle has four stages: Introduction; Growth; Maturity and Decline. In the complex and rapid variation of business environment, PLC is even shorter than before; the well sell product today maybe is the unsalable stocks tomorrow. Demand volume of product is constantly changing in every PLC stages; what¡¦s the impact for financial performance in inventory cost under different inventory strategy and profit variations, there are dynamic complexities inside with some special properties like non-linear, interconnected, time delay and counter-intuitive, etc. Therefore, this research is using System Dynamics which has been normally used to resolve dynamic complexity problems as the study method to build up a model to simulate all of the inventory strategy in inventory theory that consider the trade off between all kinds of inventory cost to probe into the impact of financial performance in different PLC stage for different product types to figure out the variation developments of all inventory costs. Some conclusions were generalized from the study as following: 1. This study builds up a developmental systemic model which is able to analysis the variation developments between inventory strategy and inventory cost for retail industry. The model includes all of inventory related molds like inventory,inventory strategy, all cost related to inventory, inventory performance measurement, etc. 2. The development systemic model is a very effective tool to support policymaker to measure inventory strategy and financial performance within a short time, to improve the management performance by using the best inventory strategy. 3. The development systemic model built up by this study can different products in different PLC stages and also considering their cost structure to analysis the impact between inventory strategy and inventory cost and variation developments of it.

Abstract In many business management policies, the inventory management and decision - makings have been the very important of the business administration. The object of the inventory management is satisfy the customer demand with minimum inventory cost; and the inventory policy is how to decide the quantity or timing of every order times, that can reach the object of the inventory management. Today aims at the supervision strategy of the business inventory system, is still to make use of mathematics and statistics computational method, compute the most economic order quantity (EOQ), the best opportune moment of reorder point (ROP). However the item of the inventory cost that have got trade off relation, inventory service level setting that also have got trade off relation with the total inventory cost. The different inventory policy relates to the different stockholding cost assemble, all operators of the business practice is looking for the balance point between service and cost, the complex relation in this dynamic state, is not a general intuition thinking, simple computing criterion, can acquire among the best solution. So this paper makes use of the System Dynamics simulation tool that is good to solve of the complex problem tool, establish the System Dynamics (SD) model, and aim at the inventory policy, inventory cost, service level setting and out-of-stock strategy to do the system simulation analysis application. Through the study of this paper, can induce following research results: 1. This paper create a System Dynamics (SD) model that can analyze the dynamic relationship between the inventory policy and inventory cost , this model includes the fundamental inventory policy, each related cost of inventory, evaluation the performance of the inventory policy etc. 2. The dynamic model that via this paper create, among the different inventory policy, explore the situation of change of the individual of inventory cost, and analyze the dynamic state of the inventory cost assemble, service level setting and businesses to operate the performance change. 3. Study of that none shortage cost and make use of the stockout strategy to reduce other inventory costs, under the different scenario of the sales, the different ABC class of the goods, applied different inventory cost combine and the setting strategy of the service level, do the dynamic state simulation analysis for business performance. 4. Study of the impact of the business, when the business at the service level set and stockout strategy usage is not appropriate. Keyword: System Dynamics, Inventory Policy, Inventory Cost, Service level, Stockout Strategy

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In this study, we consider a logistics system, in which a single supplier delivers a product to multiple retailers over a finite time horizon. Supplier decides on the amount to order in each period and services retailers facing deterministic dynamic demand via a fleet of vehicles having limited capacity. Each retailer has specific minimum and maximum levels of inventory in an order-up-to level inventory policy setting. The problem is to simultaneously determine the quantity of product to order to the supplier, retailers to be visited, the quantity of product to be delivered to retailers and routes of vehicles in each period so as to minimize system-wide costs. We present a mathematical formulation for the problem, for which we develop several Lagrangian relaxation based solution procedures providing both upper and lower bounds to the problem. We implement these solution procedures on test instances and present the results. Computational study shows that our solution procedures generate good feasible solutions in reasonable time.

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The constant needs for the reduction of companies operational costs has transformed Inventory into a targeted source for this end by upper management. The high investment value that it represents for organizations, aside from the immediate contribution to cash flow, when it is reduced, allows inventory to be a source of strategic advantage. The objective of this study is to understand the behavior of independent variables such as production cycletime or lead-time, daily demand rate of finished product and the interval between production orders and their effects on the determination of an inventory policy. The study is performed in a manufacturing company that produces intermittent, repetitive small batches and a large variety of products. Cash flow techniques are applied to detail the production processes and respective planning. The historical data of mentioned variables refer to the period from January 2000 to February 2002. These data are used to develop the calculations of safety stock and average and maximum stock from the viewpoint of the management approach in Replenishment Point and Periodically Review. The real application of the data available from the company is studied to calculate the inventory policy. It is concluded that, in spite of the adoption of a sophisticated mechanism of production planning and a strong culture of measurements by the company, the statistical data of fundamental variables are not utilized systematically to determine the inventory policy. This fact confirms the thesis that inventory reductions, in general, are circumstantial and is not supported by fundamental techniques. / A constante necessidade de redução dos custos operacionais das empresas tem transformado o Inventário em fonte preferencial, para este fim, pela alta administração. O alto valor de investimento que ele representa para as organizações, além da contribuição imediata no fluxo de caixa, quando da sua redução, faz com que o inventário seja uma fonte de vantagem competitiva.O objetivo deste estudo é compreender o comportamento das variáveis independentes como tempo de ciclo da produção ou lead-time, taxa diária de demanda do item de produto acabado e tempo de intervalo entre ordens de produção, e os seus efeitos no cálculo de uma política de inventário.O estudo é realizado em uma empresa de manufatura de produção intermitente repetitiva em lotes de pequenas quantidades e grande variedade de produtos.Técnicas de fluxo de valor são aplicadas para detalhamento dos processos de produção e do seu respectivo planejamento. Os dados históricos das variáveis mencionadas referem-se ao período de janeiro de 2000 a fevereiro de 2002. Com estes dados, desenvolvem-se os cálculos de estoque de segurança, estoque médio e máximo,sob a óptica das abordagens de gerenciamento por Ponto de Reposição e Revisão Periódica. Analisa-se a real aplicação dos dados disponíveis na empresa, para o cálculo da política de inventário. Conclui-se que apesar de ser adotado mecanismo sofisticado de planejamento de produção e haver uma forte cultura de medições por parte da empresa, os dados estatísticos das variáveis fundamentais não são utilizados de forma sistemática para o cálculo da política de inventário. Este fato confirma a tese de que as reduções de inventário, de uma maneira geral, são circunstanciais e não sustentadas por fundamentos técnicos.