Journal of Korean Institute of Industrial Engineers (대한산업공학회지)

Korean Institute of Industrial Engineers (대한산업공학회)
권호 표지

Dynamic Operation Policy for Vendor-Managed Inventory using Fixed Production Schedule

확정생산스케줄을 활용하는 동적 VMI 운영정책

  • Hyun, Hye-Mi (Department of Industrial Engineering, Ajou University) ;
  • Rim, Suk-Chul (Department of Industrial Engineering, Ajou University)
  • 한혜미 (아주대학교 대학원 산업공학과) ;
  • 임석철 (아주대학교 대학원 산업공학과)
  • Received : 2007.05.07
  • Accepted : 2008.08.06
  • Published : 2008.12.31
Download PDF
⟨ Previous Next ⟩

Abstract

While the Vendor-Managed Inventory(VMI) is a convenient inventory replenishment policy for the customer company, the supplier usually bears the burden of higher inventory and urgent shipments to avoid shortage. Recently some manufacturers begin to fix the production schedule for the next few days (such as three days). Utilizing that information can improve the efficiency of the VMI. In this study, we present a myopic optimization model using a mixed inter programming; and a heuristics algorithm. We compare the performance of the two proposed methods with the existing (s, S) reorder policy. We consider the total cost as the sum of transportation cost and inventory cost at the customer's site. Numerical tests indicate that the two proposed methods significantly reduce the total cost over the (s, S) policy.

Keywords

References

  1. Axsater, S. (2001), A Note on Stock Replenishment and Shipment Scheduling for Vendor-Managed Inventory Systems, Management science, 47(9), 1306-1310 https://doi.org/10.1287/mnsc.47.9.1306.9782
  2. Bertazzi, L., Paletta, G., and Speranza, M. G. (2005), Minimizing the Total Cost in an Integrated Vendor-Managed Inventory System, Journal of Heurisitcs, 11, 393-419 https://doi.org/10.1007/s10732-005-0616-6
  3. Cetinkaya, S. and Lee, C. (2000), Stock Replenishment and Shipment Scheduling for Vendor-Managed Inventory Systems, Management Science, 46(2), 217-232 https://doi.org/10.1287/mnsc.46.2.217.11923
  4. Chen, F. Y., Wang, T., and Xu, T. Z. (2005), Integrated Inventory Replenishment and Temporal Shipment Consolidations : A Comparison of Quantity-Based and Time-Based Models, Annals of Operations Research, 135, 197-210 https://doi.org/10.1007/s10479-005-6241-9
  5. Disney, S. M. and Towill, D. R. (2003), The effect of vendor managed inventory(VMI) dynamics on the Bullwhip Effect in supply chain, International Journal of Production Economics, 85, 199-215 https://doi.org/10.1016/S0925-5273(03)00110-5
  6. Disney, S. M., Potter, A. T., and Gardner, B. M. (2003), The impact of vendor managed inventory on transport operations, Transportation Research Part E, 39, 363-380 https://doi.org/10.1016/S1366-5545(03)00014-0
  7. Dong, Y. and Xu, K. (2002), A Supply chain model of vendor managed inventory, Transportation Research Part E, 38, 75-95 https://doi.org/10.1016/S1366-5545(01)00014-X
  8. Hong, S. C. and Park, Y. B. (2006), A Comparison Study on Retailermanaged and Vendor-managed Inventory Policies in the Retail Supply Chain, Journal of the Korean Institute of Industrial Engineers, 32(4), 382-392
  9. Yang, K. K., Ruben, R. A., and Webster, S. (2003), Managing Vendor Inventory in a Dual Level Distribution System, Journal of business logistics, 24(2), 91-108 https://doi.org/10.1002/j.2158-1592.2003.tb00047.x