Abstract
Vendor Managed Inventory (VMI) System with Consignment Inventory (CI) policy is a solution for many supply chain leaders in a highly competitive market. In this paper, totally eight different inventory supply chain models are studied. The profit function of supplier and manufacturer in different environments are compared in order to show the profitability of the overall supply chain management system in a manufacturing industry with different time horizons. The inventory systems are applied on a supply chain consisting of a single supplier and a manufacturer. The main focus of this study is to analyze the effect of payment deferral and the time value of money in push and pull (Kanban) manufacturing systems when VMI-CI policy is applied.
Highlights
Vendor managed inventory models (VMI) represent a new generation of supply chain inventory policies, which aim to increase total profitability of the supply chain
An important point is that Dong and Xu do not consider the effect of payment deferral and time value of money in their model while in practice, the buyer will usually try to put off the payment for as long as possible in order to take advantage of the time value of money
3.2.1.1 Consignment Inventory - Traditional Model. This is before adapting VMI-CI policy, and an EOQ model is used in order to minimize the inventory cost
Summary
Vendor managed inventory models (VMI) represent a new generation of supply chain inventory policies, which aim to increase total profitability of the supply chain. According to Copacino (1993), in a VMI model, the supplier is responsible for monitoring and controlling inventory at their own stores, as well as at warehouses of the manufacturers (customers). In this policy, the supplier makes decisions for manufacturer warehouse inventory replenishment . CIS policy forces suppliers to increase quality reducing defects and sale loss (Copacino, 1993) By combining these two policies together (VMI-CI), the supplier is the decision-maker of the inventory in the manufacturer store but is responsible for the manufacturer’s inventory cost. When focusing on total profitability of the supply chain, a methodology is proposed in order to help the supplier to find a proper manufacturer
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
