A Study On System Dynamics Simulation Of VMI Inventory Control In Supply Chain

Inventory levels can affect not only the overall supply chain costs and profits, but also related to the overall performance of the supply chain. At present, Enterprises in the premise of meeting customer needs and guaranteed service levels, we also need strive to get comprehensive management over all aspects of the entire supply chain effectively integrate the really logistics, information flow and cash flow. By combining "third-rate ",we strive to minimize the demand fluctuations, inventory costs and also to maximize profits of the supply chain. VMI (Vendor Managed Inventory) is a new type of management model by which the upstream companies of the supply chain can implement inventory control and management to the downstream firms. This management can reduce the fluctuations in demand, improve the efficiency of the entire supply chain.In this paper, the topic " A study on system dynamics simulation of VMI intentory control in supply chain " is mainly used system dynamics modeling and simulation approach. The two supply chain (suppliers,retailers,end-user) is studied. According to the basic theory and research methods of the inventory control in supply chain, and the basic theory and characteristics of system dynamics, we analyze VMI inventory of the supply chain. The purpose of the study want to find the dynamic operation of VMI from the system point of view., especially we forcus on the operation of time-based VMI consolidation replenishment (TCR-VMI). Under the different end-customer type, the "Bullship Effect" of TCR-VMI consolidation replenishment and traditional replenishment are compared. The results shows that TCR-VMI can well reduce the "Bullwhip Effect". In addition, this paper will combine contract theory of the supply chain and VMI management model in order to further improve the operational efficiency of the supply chain. And we studied how the VMI management model based on the buy-back contract and revenue sharing contract to improve supply chain performance. Through the establishment of the system dynamics model of the supply chain,we analyze the impact of critical parameters (such as revenue sharing factor, the repurchase price, etc.) to suppliers and retailers of income distribution. Through these studies, we strive to develop a more rational enterprise supply chainmanagement strategy, so that make the entire supply chain to achieve effective coordination to achieve maximum benefits.