Coordination Policy Of VMI With One Supplier And Two Distributors

In recent years, VMI has been applied to more and more industries. However, as a "responsibility inversion" form of inventory management from the traditional inventory control strategy, VMI makes supplier's inventory cost and risk of stockout increase, which leads to supplier's profits reduction, thus brings the imbalance of responsibilities and interests of supplier. Therefore, the implementation of VMI would be affected by having no coordination mechanism. Moreover, there are more than two buyers in VMI systems. In light of this, this thesis aims to study the coordination of VMI with one vendor and two distributors. According to the demand types of distributors, the model and coordination mechanism are discussed in three demand environments which are deterministic demand, dynamic demand and stochastic demand. Specifically, the main innovative work and research conclusions are summarized as follows:(1)Under deterministic demand, the one supplier (assuming as a manufacturer) two distributors VMI replenishment policy of integer-ratio time coordination is analyzed. Then, the Shapley Value algorithm is applied to the allocation of profit caused by the VMI implementation among the supplier and distributors and the inventory cost allocation scheme is also redesigned. Finally, a numerical example is presented to verify the theoretical modeling and solution. Results show that although the total cost would be reduced by VMI implementation, the supplier's cost would increase while the two distributors'cost would reduce if there is no redistribution of the inventory cost. Under the redistribution of the inventory cost by Shapley value method, the cost of the supplier and two distributors decrease after the implementation of VMI. Therefore, a cost sharing scheme which satisfies all parties is obtained.(2)The replenishment policy of VMI with one supplier and two distributors is discussed in dynamic demand environment with the constraints of transportation cost and service level. A revenue sharing mechanism is designed to coordinate the interests of the supplier and distributors after the implementation of VMI. Then a mixed integer programming method is used to solve the model after a conversion process, which avoids the derivation of the replenishment rules by using dynamic programming method. Results show that, as the total profit of supply chain after VMI implementation increases, the profits of the supplier and distributors are not less than before with the revenue sharing factor designed. (3)The replenishment policy of VMI with one supplier and two-distributors is studied under stochastic demand and price subsidy mechanism is designed to coordinate the interests of the supplier and distributors after the implementation of VMI. Demand is assumed to obey normal distribution, and the transportation cost function is assumed to be piecewise. The safety stock and service level constraints are also taken into account. Results show that, total supply chain cost is reduced through the use of common replenishment epochs after VMI replenishment. When using equal allocation method in the coordination of interests, the supplier and distributors have different levels of profit improvement with the price factor designed. Finally, parameter sensitivity analysis shows that, the changes of b and Sp has little effect on the price factor, while the changes ofu1, S01 and S1, have different degrees of impact on price factor.