Analysis Of The Limitations Of Application Of The Vmi To Reduce The Bullwhip Effect

Till now, quite a lot of research works have been done about the bullwhip effect in the supply chain. About how to reduce the bullwhip effect, there are also a lot of methods have been recommended, especially the VMI model (Vendor Managed Inventory). Although the effectiveness of VMI has been proved theoretically, but in the real business world, the number of company who adopt the VMI model to solve bullwhip effect is very limited,compared to the widely existence of bullwhip effect. In this paper, the author tried to explain this phenomenon both in theoretical and practical ways.At first, the bad effect, causes and resolve methods of the bullwhip effect have been summarized. And then,this article introduced and categorized the VMI model, while the effectiveness of VMI in reducing the bullwhip effect under some conditions had also been proved in a simply two-stage supply chain. At last, the paper explained the reasons why VMI model hasn't been used broadly both in theoretical and practical ways.