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Stocking policy in a two-party vendor managed channel with space restrictions

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  • Xu, Kefeng
  • Leung, Mark T.

Abstract

In a two-party VMI channel, the vendor operates the basic stocking and delivery functions and makes inventory replenishment decisions while the retailer is responsible for customer acquisition and in-store services. This paper focuses on such retail channel and proposes an analytical model for the partners in supply channel to determine the inventory policy with the objective of optimizing system net profit. The model explicitly incorporates issues from both the vendor and the retailer in order to derive a policy for mutual benefits. To illustrate and obtain insights from the proposed solution procedure, we devise a set of numerical analyses based on various scenarios. Factors such as shelf-space-dependent demand, shelf-space capacity, demand pattern, logistics characteristics, and disparity between holding costs of the warehouse and the retail store are also investigated.

Suggested Citation

  • Xu, Kefeng & Leung, Mark T., 2009. "Stocking policy in a two-party vendor managed channel with space restrictions," International Journal of Production Economics, Elsevier, vol. 117(2), pages 271-285, February.
    • Handle: RePEc:eee:proeco:v:117:y:2009:i:2:p:271-285
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    3. Snead, Kenneth & Stott, David & Garcia, Andy, 2010. "The causes of misapplied capacity related manufacturing costs and corresponding reporting implications: A conceptual perspective," Journal of Accounting Education, Elsevier, vol. 28(2), pages 85-102.
    4. 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.
    5. Taleizadeh, Ata Allah & Shokr, Iman & Konstantaras, Ioannis & VafaeiNejad, Mahyar, 2020. "Stock replenishment policies for a vendor-managed inventory in a retailing system," Journal of Retailing and Consumer Services, Elsevier, vol. 55(C).
    6. Hariga, Moncer & Gumus, Mehmet & Daghfous, Abdelkader, 2014. "Storage constrained vendor managed inventory models with unequal shipment frequencies," Omega, Elsevier, vol. 48(C), pages 94-106.
    7. Beatrice Marchi & Simone Zanoni & Marco Pasetti, 2019. "Multi-Period Newsvendor Problem for the Management of Battery Energy Storage Systems in Support of Distributed Generation," Energies, MDPI, vol. 12(23), pages 1-13, December.
    8. Guan, Ruoxi & Zhao, Xiaobo, 2010. "On contracts for VMI program with continuous review (r, Q) policy," European Journal of Operational Research, Elsevier, vol. 207(2), pages 656-667, December.
    9. 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.
    10. Glock, Christoph H., 2012. "The joint economic lot size problem: A review," International Journal of Production Economics, Elsevier, vol. 135(2), pages 671-686.
    11. Hariga, Moncer A., 2010. "A single-item continuous review inventory problem with space restriction," International Journal of Production Economics, Elsevier, vol. 128(1), pages 153-158, November.
    12. Kang, Jae-Hun & Kim, Yeong-Dae, 2012. "Inventory control in a two-level supply chain with risk pooling effect," International Journal of Production Economics, Elsevier, vol. 135(1), pages 116-124.
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