Integration Of A Two-stage Supply Chain In Vendor-managed Inventory

As the global manufacturing and economic integration, the competition among enterprises has gradually shifted as the competition among chain and chain, network and network. Quick response capability and efficient customer response capability, etc., have become an enterprise's decisive factor of survival and development. Through the supply chain cooperation between enterprises, that can improve the supply chain's flexibility, can meet consumer demand, effectively and lower the bullwhip effect and so on. VMI (Vendor-Managed Inventory, VMI) as a new inventory management methods, which break the traditional inventory management model and make the supply chain activities having a better synchronization. It has a reflection of the supply chain integrated integration, and meets the new requirements of the supply chain management inventory management. There have a lot of papers to study the replenishment strategies in VMI. It has great practical significance. This article considers a two-stage supply chain that consists of a supplier and a retailer.Main findings of this article are as follows:First, in the case of deterministic demand, suppliers and retailers are not allowed temporarily out of stock, we studied the supply chain integration of a supplier-retailer channel in VMI and analyzed the implementation of the VMI for the system's benefits. The results show that when the backlogging is not allowed, the implementation of VMI makes the system a lower cost. At the same time, the optimal replenishment quantity increase, and the optimal replenishment frequency reduces.Secondly, in the case of deterministic demand, allowing the retailer have stock-outs, we study the supply chain integration of a supplier-retailer channel in VMI and analyzed the implementation of the VMI for the system's benefits. Several conclusions are gained:allowing the retailer has stock-out, the implementation of the VMI also make the system to lower costs, optimal replenishment quantity to increase and the optimal replenishment frequency to reduce, while the implementation of VMI enables the retailer to increase the optimum out of stock.Finally, in the case of demand is affected by the retail price and retailer's promotional costs, allowing retailer have stock-outs, we study the Stackelberg game and contract optimization problems between supplier and retailer in VMI. We analyze the pricing strategies, promotional cost investment amount and replenishment strategies. The results show that, by establishing the supplier's leader position in a Stackelberg game, it make the optimal decisions to maximize its profits. However, by adjusting the optimal wholesale price, the profits of system have a room to improve. Therefore, by lease contracts, the supplier is willing to change the wholesale price to improve the system of profits.The main contributions of this paper:(1) This paper mainly studies the supply chain integration of a supplier-retailer channel in VMI. On the basis of previous researches, we amend and expand the model from two aspects which are the supplier's replenishment method and the model assumptions.(2) In the case of deterministic demand, allowing the retailer have stock-outs, we applied a non-mathematical derivation of the analytical method to solve the optimal replenishment policy, which is better mastered by those who only have elementary knowledge of mathematics.(3) Most previous studies assume that the demand function is a linear function of the retail price. We consider the demand is affected by the retail price and the amount of promotional costs and meet the Cobb-Douglas utility function.