Optimizing service level based on disposing and inventory cost of surplus sharing

Optimization of cycle service level and replenishment policy when sales surplus is disposed by seller or supplier, and when disposing and inventory cost of surplus is shared or not, is analyzed. The conclusion shows: when surplus is disposed by seller, the optimal service level of disposing and inventory cost shared is higher than not shared. When surplus is disposed by supplier, sharing disposing cost makes the level lower, only when inventory cost is also shared at the same time, the level is increased. In the same disposing manner and cost sharing, the level in multiorder policy is higher than that in single order policy, and quick response strategy of multiorder achieves higher product availability in practice.