Improving and evaluating various models with vendor-managed inventory

Abstract

The practice of vendor-managed inventory (VMI) draws a high attention from both industrial and academic worlds. On the basis of previous studies, we introduce three parameters, namely the fixed and variable transportation cost, and the service cost per unit, to develop models for the following three scenarios by mainly employing the method used in Dong & Xu (Ref.13): (1) traditional supply chain without VMI, (2) the VMI mode without a Third Party Logistics (TPL) company, (3) the TPL-VMI mode with TPL participation. By analyzing scenarios 1 and 2, we obtain conclusions similar to those in Dong & Xu (Ref.13), though with different conditions. By analyzing scenarios 2 and 3, we find that it is possible to optimize the supply chain performance.