Analysis of extra cost for small suppliers under VMI condition

Abstract

The original idea of the vendor managed inventory (VMI) is to reduce the stock cost considerably and get rid of "bull-whip effect" for the whole supply chain. However, it is common that the small supplier is always being oppressed by the big manufacturers because of the difference of strength between them. In this article, the extra cost for the small supplier which is one member of supply chain have been analyzed and the relative factors which support the extra cost have been calculated either.