The Study On Vendor Managed Inventory Dynamic Simulation Upstream Supply Chain

As the market competition is sharpening, the competition between enterprises and enterprises has developed into competition between supply chain and supply chain. Supply chain management has become the enterprise core competitive resource. Inventory management which act as an important aspect of supply chain management is becoming more and more universal attention. On the traditional supply chain inventory management mode, fragmented among enterprises, in order to maximize their own interests, the enterprise does not response the real demand in the upstream orders, information distortion causes bullwhip effect increased step by step, eventually lead to their own inventory costs increase.VMI(Vendor Managed Inventory, VMI) is based on this situation, the suppliers on behalf of the management enterprise inventory, enterprises and suppliers share demand information and reduce the bullwhip effect. General manufacturers supply chain of raw materials into finished products after processing production enterprise. Manufacturers’ inventory management includes raw material and finished goods inventory management. Products from raw material purchase to production and processing to outbound, considering the complicated demand of current customer, the inventory which manufacturers act as the core of supply chain is dynamic, complex and changeable.This thesis mainly studies on the supply chain which is the two-stage supply chain consisting of raw material suppliers and manufacturers and manufacturers is the main body. Adopting the method of system dynamics to build the traditional inventory model and VMI inventory model, the bullwhip effect acts as the main index, do some analysis about enterprises’ inventory in the two supply chain models when customer demand rate is in the situation of random change, sudden change and season respectively cyclical change. Vensim simulation software is used to build its corresponding model respectively and the cause tree is adopted to analysis relationship between the variables. With the simulation of inventory change from 0 to 100 weeks, then the relevant inventory data are counted and contrasted, as a result VMI can weaken more bullwhip effect than traditional inventory management mode and raw materials supplier can management manufacturers’ raw materials inventory is also proved to be feasible. System dynamics simulation is based on the time variable function, by adjusting the time variable parameters, it is concluded that the optimal time of VMI adjustment scheme: to weaken the bullwhip effect should try to reduce transport delay time and inventory coverage period, to reduce the production rate on the basis of on time delivery appropriate and to prolong move inventory adjustment and smooth as far as possible.