Abstract：The three-echelon supply chain model is constructedaccording to the related theory of supply chain and inventory management; andthen the virtual warehousing management and three-echelon operation arerealized on the base of information sharing. Finally the model of three-echelonsupply chain inventory cost is analyzed and optimized from the point ofretailers. The example is used to point that implementating virtual inventorymanagement can reduce the inventory to realize the goal of sum cost minimum. 

Keywords：Virtual Environment; Inventory Management; Study

1Introduction

Supply chain is the network of organizations that areinvolved, through upstream and downstream linkages, in the different processand activities that produce value in the form of products and services in thehands of the ultimate consumer. (Shihua MA,2005). Because of the contradictions between supply and demand, the enterprisesshould adopt the reasonable inventory control strategy  according to the actual requirements. Inrecent, the hot points in the field of academic circles are the virtual warehousingmanagement and its implement.

2Three-echelon supply chainand virtual warehousing management based on information sharing

2.1 Damage caused by bullwhipeffect in the traditional inventory control 

In the traditional supply chain model, the materialflow is sent to the customers from upstream to downstream, while theinformation flow is sent to firms from downstream to upstream. The enterprisescan not grasp the really need and supply capacity, which has lead to thebullwhip effect. The supply chain has suffered huge loss and increases thewhole competitiveness.(Yuanxin Huang, 2008).