An Inventory Model for Deteriorating Items Using Vendor-Managed Inventory Policy

Abstract

In recent researches, vendor managed inventory (VMI) policy is rarely considered for deteriorating items. This study considered the supply chain partner’s collaboration via a VMI system and provided an EOQ model for a two-level supply chain (single supplier - single retailer) to examine the inventory management proceedings for VMI and non-VMI supply chains. By a new approach in modeling, the equations are simplified. The demand is stock-dependent and deterioration and backlogging rates are assumed to be constant. A comparison between the cost of two mentioned cases is done in this article. The results of analytical examination of inventory costs with and without VMI show that VMI system in our proposed model always has the ability to reduce total costs of the supply chain and is always better than the traditional one. Some numerical examples and sensitive analysis are also given to illustrate the application of the proposed model.