Study On Vendor-Managed Inventory And Its Coordination

With economic development and environmental change, the competition among enterprises has turned into the competition among supply chains. In supply chain management, the optimization of inventory management mode has become the indispensable process in determing the property of supply chain. The Vendor-managed inventory (VMI) mode has aroused the great attention in the enterprise and academic fields.The paper studies on issues as the theoretical foundation, appreciation mechanism and implementation conditions of VMI, VMI coordination based on exogenous price, endogenous price, supply-effort interrelation and quantity-transportation. Detailed studies are listed as follows:(1) Theoretical Basis of Vendor-Managed InventoryProposing the definition of VMI, the paper systematically discourses on a variety of theories like Supply Chain Management, Just in Time and Zero Inventory, Quick Response and Effective Consumer Response, Business Process Reengineering, Information Technology, Cooperative Competition, Core Competency and Outsourcing, Transaction Cost and Principal Agent, all of which can support and boost the birth and development of VMI.(2) Appreciation Mechanism of Vendor-Managed InventoryBased on the customer and supplier perspectives, the value addition of VMI has been concretely analysed through using Economic Value Added factors like sales revenue, sales cost, inventory, other liquid assets and capital assets, with the corresponding measures being proceeded.(3) Implementation of Vendor-Managed InventoryUsing the transaction cost theory, the decisive economic factors of VMI implementation have been analysed. Acted as the downstream enterprise, the discussions on the boundary conditions of VMI realization have been included. Those conditions are realised under such circumstances in which specialization, scale economy and core competency promotion are not taken into account, or the first two factors are considered yet without core competency promotion, or with all of the three factors being taken into account.Acted as both of the upstream ane downstream enterprises, the paper also analyzes and compares the expected profits of suppliers and retailers in the supply chains of Retailer-managed inventory and VMI models, both of which are under newsvendor circumstances. It provides the conditions of Pareto improvement or Kaldor-Hicks improvement involved in the VMI.(4) Vendor-Managed Inventory Coordination Based on Exogenous PriceAS price is exogenous variable, the paper puts forward price subsidiarymechanism and revenue sharing mechanism to coordinate VMI. It sets up the two mechanisms of the traditional models, Stackelberg models and NASH negotiation models. It makes the corresponding numeric examples.(5) Vendor-Managed Inventory Coordination Based on Endogenous Price AS price is endogenous variable, the relation of demand and price being the multiplicative demand situation, the paper builds up revenue sharing mechanism of Stackelberg model and NASH negotiation model, and revenue sharing and profit return mechanism assembling model. While price is endogenous variable, the relation of demand and price being additive demand situation, it builds up revenue sharing mechanism of Stackelberg model and NASH negotiation model. It provides the confirmation approaches of optimal parameters in the models.(6) Vendor-Managed Inventory Coordination Based on Demand and Effort InterrelationIn the relation of demand and effort level being additive or multiplicative demand situations, the models of integrated supply chain and three game structured VMI supply chains (NASH static game playing in which decision making is mutual, Stackelberg game structure dominated by retailers and Stackelberg game structure dominated by suppliers) have been created. The effort level and inventory level of every model are determined and compared. The coordination approach is proposed, in which retailers undertake part of the unmarketable costs and suppliers partake some of the promotion costs, with the settlement of confirmation approaches about optimal parameters.(7)Vendor-Managed Inventory Coordination Based on Quantity-Based Transportation and Comparisons between Quantity-Based Transportation and Time-Based Transportation Policy According to the object of least average expectancy cost, the VMI coordination model built on quantity-based transportation has been established. The discrete algorithm is used to settle the optimal delivery frequency, delivery quantity and target inventory level. In regards to the two VMI coordination situations of time-based transportation, in which the optimal target inventory levels being zero and non-zero, the comparisons of average expectancy cost and cost saving rates between the VMI coordination of time-based transportation and quantity-based transportation have been made through deductive inference and numerical example.