Title: Vendor-Managed Inventory model for single-vendor single-buyer Supply Chain

Authors: M.A. Darwish, S.K. Goyal

Addresses: Department of Industrial and Management Systems Engineering, College of Engineering and Petroleum, Kuwait University, P.O. Box 5969, 13060 Safat, Kuwait. ' John Molson School of Business, Concordia University, 1455 De Maisonneve Blvd. West, Montreal, Quebec, Canada H3G1M8

Abstract: In this paper, a mathematical model for the single-vendor single-buyer problem under VMI configuration is considered. In particular, the contractual agreement between the vendor and buyer is explicitly included. This contract includes an upper limit on the buyer|s inventory level such that the vendor is penalised for items exceeding this limit. The purpose of this upper bound is to protect the buyer against excessive inventory. An algorithm is devised to solve the proposed model. Moreover, sensitivity analysis is conducted to show the effect of key parameters of the model on the optimal solution.

Keywords: single-vendors; single-buyers; VMIs; vendor-managed inventories; vendor management; SCM; supply chain management; mathematical models; contractual agreements; contracts; upper limits; inventory levels; penalties; penalisation; upper bounds; excessive inventories; algorithms; sensitivity analysis; optimal solutions; logistics systems; logistics management.

DOI: 10.1504/IJLSM.2011.038990

International Journal of Logistics Systems and Management, 2011 Vol.8 No.3, pp.313 - 329

Published online: 30 Apr 2015 *

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