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Vendor managed inventory with consignment stock for supply chain with stock- and price-dependent demand

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  • M. Hemmati
  • S.M.T. Fatemi Ghomi
  • Mohsen S. Sajadieh

Abstract

This paper presents a single vendor–single buyer coordinated model. The vendor produces a single deteriorating item and transfers it to the buyer in equal shipments. The model is based on vendor managed inventory with consignment stock (VMI-CS) agreement in which the vendor uses the buyer’s warehouse. The buyer stocks items both on his shelf and in his warehouse. The demand is assumed to be linearly sensitive to inventory level and selling price. The objective is to determine variables that maximise the total profit. An exact solution procedure is proposed to find the optimal solution. Numerical results show that supply chain members will benefit from the advantages of economies of scale in coordinated model with VMI-CS policy.

Suggested Citation

  • M. Hemmati & S.M.T. Fatemi Ghomi & Mohsen S. Sajadieh, 2017. "Vendor managed inventory with consignment stock for supply chain with stock- and price-dependent demand," International Journal of Production Research, Taylor & Francis Journals, vol. 55(18), pages 5225-5242, September.
    • Handle: RePEc:taf:tprsxx:v:55:y:2017:i:18:p:5225-5242
    DOI: 10.1080/00207543.2017.1296203
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    Cited by:

    1. Hesham K. Alfares & Ahmed M. Attia, 2017. "A supply chain model with vendor-managed inventory, consignment, and quality inspection errors," International Journal of Production Research, Taylor & Francis Journals, vol. 55(19), pages 5706-5727, October.
    2. Nistha Kumari & Yogendra Kumar Rajoria & Anand Chauhan & Satya Jeet Singh & Anubhav Pratap Singh & Vineet Kumar Sharma, 2024. "A Supply Chain Coordination Optimization Model with Revenue Sharing and Carbon Awareness," Sustainability, MDPI, vol. 16(9), pages 1-29, April.
    3. M. Masanta & B. C. Giri, 2022. "A manufacturing–remanufacturing supply chain model with learning and forgetting in inspection under consignment stock agreement," Operational Research, Springer, vol. 22(4), pages 4093-4117, September.
    4. Jing Liu & Fuyou Huang & Chao Ma, 2021. "Coordination of VMI supply chain with replenishment tactic under risk aversion and sales effort," 4OR, Springer, vol. 19(3), pages 389-414, September.

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