Determination of the inventory policies parameters applied within VMI approach

Abstract

Vendor Managed Inventory (VMI) is one of the new and effective techniques for managing inventories in supply chains. VMI is an approach that guarantees tangible benefits, such as the increase in buyer profit and vendor profit, and intangible benefits such as reduced inventory, replenishments, stock outs costs, and the Bullwhip Effect. In the literature, VMI models have been proven to reduce the cost of inventory compared with traditional one. In this paper, we continue studying these models and we focus on the periodic inventory policies applied within the framework of VMI approach. We consider a supply chain for a single item with two partners (producer and retailer), where the demand is assumed to be deterministic and static. The aim is to determine the inventory policies parameters in two cases: with and without implementing the VMI approach.