Profit Distribution Between Suppliers And Manufacturers Based On VMI

In the traditional supply chain, each enterprise manages its own inventory, pursues for self-interest maximization, which inevitably brings about bullwhip effect and double marginal effect, and affects the operating efficiency of a supply chain. VMI model was put forward, it is beneficial to promote enterprise cooperation, reduce the total supply chain costs, to improve the overall supply chain performance. But under the VMI model, due to the supplier bear the retailer’s inventory, its profit may reduce, thus it is unable to realize supply chain coordination. Supply chain contracts as an effective solution to solve the problem of the supply chain members profit redistribution and the problem of supply chain coordination is more and more get the attention of researchers and enterprises.This paper bases on an actual project, uses supplier B and manufacturer C as main research object, researches on the profit distribution of the supply chain upstream level under the VMI model. By researching the data of supplier B, the paper analyzes the necessity and limitations about the VMI project which supplier B take part into. By comparing the applicability of the various supply chain contracts, the wholesale price contract and quantity commitment contract are chosen as the final contract to solve this problem. The paper analyzes the profits of supplier and manufacturer before and after the VMI, then sets the contract parameter, builds the wholesale price contract and quantity commitment contract model. Finally the paper solves the model according to the actual data, gets the range of the wholesale price and committing quantity, which makes suppliers, manufacturers and supply chain profit all be improved.The results suggest that supplier B and manufacturer C determine the final wholesale price or committing quantity by consulting with each other can guarantee the profits of both sides, achieve win-win situation. At the same time, according to the actual situation of supplier B and manufactures C, both enterprises are more willing to consider the quantity commitment contract.