Study On Two-level Supply Chain Coordination Under Vendor Managed Inventory

With the increasing market competition, inventory management is more and more important in the supply chain. Traditional supply chain inventory management model can not adapt to the market competition and reduce the overall competitive advantage of the supply chain. Under this circumstance, the Vender Management Inventory (VMI) mode has emerged. However, VMI could not eliminate double marginal effect. And the supplier will pay the costs for all unmarketable goods, reduce the supplier's enthusiasm for participating the cooperation. Therefore, we should use contracts to restrict all parties and coordinate the supply chain.Based on the home and abroad research, this article studies the coordination of the supply chain which implementing VMI, under different situations such as"demand is influenced by price and supplier's efforts","demand is influenced by inventory-level and retailer's efforts","supplier has waste-averse decision bias". This article analyzes the decision and profit of each party and designs a related contract to coordinate the supply chain.As to the situation of"demand is influenced by price and supplier's efforts", a coordination model based on collaborative partnerships with the demand is sensitive to both the effort and price is developed. Base on the comparing the centralized decision-making and benefits of all parties, then a contact of cost allocation and revenue-sharing is designed to coordinate the decentralized supply chain.As to the situation of"demand is influenced by inventory-level and supplier's efforts", a model based on collaborative partnerships with inventory-level decision and effort-decision is developed. The result expresses that the inventory level chosen by the supplier and the efforts level chosen by the retailer under the decentralized decision-making are both lower than the optimal levels under the centralized one, and the efficiency of supply chain under the decentralized decision-making is also lower than that under the centralized one. Then a contact of cost allocation is designed to coordinate the decentralized supply chain, the conclusion implies the contract can contact supplier and retailer, and they both can get more profit than under decentralized one.As to the special supply chain with a waste–aversion supplier, this chapter provides a mode of the supply chain which consists of a supplier and a retailer. Then this chapter compares the decision making of supplier in different situations such as waste-aversion and risk-neutral. The results shows that, when the supplier has waste-averse decision bias, the inventory level and profit of supply chain are both lower than the risk-neutral.