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On the benefits of CPFR and VMI: A comparative simulation study

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  • Sari, Kazim

Abstract

This paper aims to help managers of a supply chain to determine an appropriate level of collaboration according to their specific business conditions. For this purpose, a comprehensive simulation model representing two popular supply chain initiatives, that are collaborative planning, forecasting and replenishment (CPFR) and vendor-managed inventory (VMI), is constructed. In addition, a traditionally managed supply chain (TSS) is also included in the model as a benchmark. The results indicate that benefits of CPFR are always higher than VMI. However, we also realize that under certain conditions, the gap between the performances of CPFR and VMI does not rationalize the additional resources required for CPFR. Especially, when the lead time is short and/or when available manufacturing capacity is tight, a careful consideration has to be given on the selection of an appropriate collaboration mode.

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Bibliographic Info

Article provided by Elsevier in its journal International Journal of Production Economics.

Volume (Year): 113 (2008)
Issue (Month): 2 (June)
Pages: 575-586

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Handle: RePEc:eee:proeco:v:113:y:2008:i:2:p:575-586

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Web page: http://www.elsevier.com/locate/ijpe

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  1. Birendra K. Mishra & Srinivasan Raghunathan, 2004. "Retailer- vs. Vendor-Managed Inventory and Brand Competition," Management Science, INFORMS, vol. 50(4), pages 445-457, April.
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  12. Yossi Aviv, 2001. "The Effect of Collaborative Forecasting on Supply Chain Performance," Management Science, INFORMS, vol. 47(10), pages 1326-1343, October.
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  14. De Toni, Alberto Felice & Zamolo, Elena, 2005. "From a traditional replenishment system to vendor-managed inventory: A case study from the household electrical appliances sector," International Journal of Production Economics, Elsevier, vol. 96(1), pages 63-79, April.
  15. Zhao, Xiande & Xie, Jinxing & Leung, Janny, 2002. "The impact of forecasting model selection on the value of information sharing in a supply chain," European Journal of Operational Research, Elsevier, vol. 142(2), pages 321-344, October.
  16. Disney, S. M. & Towill, D. R., 2003. "The effect of vendor managed inventory (VMI) dynamics on the Bullwhip Effect in supply chains," International Journal of Production Economics, Elsevier, vol. 85(2), pages 199-215, August.
  17. Srinagesh Gavirneni, 2002. "Information Flows in Capacitated Supply Chains with Fixed Ordering Costs," Management Science, INFORMS, vol. 48(5), pages 644-651, May.
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  19. Frank Chen & Zvi Drezner & Jennifer K. Ryan & David Simchi-Levi, 2000. "Quantifying the Bullwhip Effect in a Simple Supply Chain: The Impact of Forecasting, Lead Times, and Information," Management Science, INFORMS, vol. 46(3), pages 436-443, March.
  20. Yossi Aviv, 2007. "On the Benefits of Collaborative Forecasting Partnerships Between Retailers and Manufacturers," Management Science, INFORMS, vol. 53(5), pages 777-794, May.
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Cited by:
  1. Lyu, JrJung & Ding, Jyh-Hong & Chen, Ping-Shun, 2010. "Coordinating replenishment mechanisms in supply chain: From the collaborative supplier and store-level retailer perspective," International Journal of Production Economics, Elsevier, vol. 123(1), pages 221-234, January.
  2. Ramanathan, Usha, 2013. "Aligning supply chain collaboration using Analytic Hierarchy Process," Omega, Elsevier, vol. 41(2), pages 431-440.
  3. Ryu, Kwangyeol & Moon, Ilkyeong & Oh, Seungjin & Jung, Mooyoung, 2013. "A fractal echelon approach for inventory management in supply chain networks," International Journal of Production Economics, Elsevier, vol. 143(2), pages 316-326.
  4. Rad, Reza Hosseini & Razmi, Jafar & Sangari, Mohamad Sadegh & Ebrahimi, Zahra Fallah, 2014. "Optimizing an integrated vendor-managed inventory system for a single-vendor two-buyer supply chain with determining weighting factor for vendor׳s ordering cost," International Journal of Production Economics, Elsevier, vol. 153(C), pages 295-308.
  5. Ramanathan, Usha & Muyldermans, Luc, 2010. "Identifying demand factors for promotional planning and forecasting: A case of a soft drink company in the UK," International Journal of Production Economics, Elsevier, vol. 128(2), pages 538-545, December.
  6. Lee, Jun-Yeon & Ren, Louie, 2011. "Vendor-managed inventory in a global environment with exchange rate uncertainty," International Journal of Production Economics, Elsevier, vol. 130(2), pages 169-174, April.
  7. Ramanathan, Usha & Gunasekaran, Angappa, 2014. "Supply chain collaboration: Impact of success in long-term partnerships," International Journal of Production Economics, Elsevier, vol. 147(PB), pages 252-259.

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