Coordinating Production and Delivery Under a (z, Z)-Type Vendor-Managed Inventory Contract
Manufacturing & Service Operations Management
Supply Chain Inventory Management and the Value of Shared Information
Management Science
Manufacturer Benefits from Information Integration with Retail Customers
Management Science
A new heuristic to solve the one-warehouse N-retailer problem
Computers and Operations Research
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Vendor managed inventory (VMI) is a supply chain partnership strategy that allows a supplier to place orders on behalf of its customers. This paper considers a supply chain composed of a single vendor and multiple retailers operating under a VMI contract that specifies limits on retailers' stock levels. We address the problem of synchronizing the vendor's cycle time with the buyers' unequal ordering cycles by developing a mixed integer non-linear program that minimizes the joint relevant inventory costs under storage restrictions. We also propose a cost efficient heuristic to solve the developed optimization problem. We conducted computational experiments to assess the reduction in the total supply chain costs resulting from relaxing the restriction of equal ordering cycles. It is found that the heuristic generates greater cost savings in cases of increased variability in retailers' demand and cost parameters.