Vendor managed inventory for single-vendor multi-retailer supply chains

Abstract

Vendor managed inventory (VMI) as a supply chain coordination mechanism has been gaining a lot of attention. This paper develops analytical models for various approaches through which a single vendor�multiple retailer system may be coordinated through VMI. Through detailed analysis of the parameters involved, we discuss the conditions under which each of these approaches may be preferred. We also highlight the savings that can be derived in the transportation cost in a VMI setting.