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Modeling a Coordinated Manufacturer–Buyer Single-Item System Under Vendor-Managed Inventory

In: Handbook of EOQ Inventory Problems

Author

Listed:
  • Fidel Torres

    (Universidad de los Andes)

  • Frank Ballesteros

    (Universidad de los Andes)

  • Marcela Villa

    (Universidad Pontificia Bolivariana)

Abstract

This work develops a new coordinated manufacturer–buyer model for a single item in a vendor-managed inventory (VMI) context. The proposed model includes the manufacturing uptime and a manufacturer–buyer synchronization scheme. This mechanism makes logistical coordination between manufacturer and buyer much easier. The analysis of the mathematical model of coordination considers production and demand rates, as well as totals of the manufacturer and the buyer’s ordering and holding inventory costs. This study is complemented by a sensitivity analysis. It focuses on the effects of parameter variations on proposed performance measurements in the manufacturer–buyer VMI-coordinated scheme. Finally, analytical conditions under which the suggested coordinated implementation of VMI gives benefits to both manufacturer and buyer and to the supply chain are deduced and verified. Results show that it is possible for both the manufacturer and buyer to obtain profits in VMI implementation by selecting satisfactory parameter combinations using our proposed coordination scheme in a win–win relationship.

Suggested Citation

  • Fidel Torres & Frank Ballesteros & Marcela Villa, 2014. "Modeling a Coordinated Manufacturer–Buyer Single-Item System Under Vendor-Managed Inventory," International Series in Operations Research & Management Science, in: Tsan-Ming Choi (ed.), Handbook of EOQ Inventory Problems, edition 127, pages 247-278, Springer.
    • Handle: RePEc:spr:isochp:978-1-4614-7639-9_12
    DOI: 10.1007/978-1-4614-7639-9_12
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    Cited by:

    1. Fidel Torres & César García-Díaz, 2018. "Evolutionary dynamics of two-actor VMI-driven supply chains," Computational and Mathematical Organization Theory, Springer, vol. 24(3), pages 351-377, September.
    2. Parsa, Payam & Rossetti, Manuel D. & Zhang, Shengfan & Pohl, Edward A., 2017. "Quantifying the benefits of continuous replenishment program for partner evaluation," International Journal of Production Economics, Elsevier, vol. 187(C), pages 229-245.

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