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

Hyun, Hye-Mi (Department of Industrial Engineering, Ajou University)
Rim, Suk-Chul (Department of Industrial Engineering, Ajou University)
Publication Information
Journal of Korean Institute of Industrial Engineers / v.34, no.4, 2008 , pp. 425-432 More about this Journal
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
VMI; inventory Replenishment Policy; Fixed Production Schedule;
Citations & Related Records
Times Cited By KSCI : 1  (Citation Analysis)
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