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A vendor-managed inventory scheme as a supply chain coordination mechanism

Author

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  • Abhishek Chakraborty
  • A.K. Chatterjee
  • Arqum Mateen

Abstract

In this paper, we have considered a vendor-managed inventory (VMI) arrangement in a supply chain (SC), where the buyer imposes a penalty for shipments exceeding an upper limit. We have shown as how the industry practice of VMI under penalty can be used as a SC coordination mechanism. The vendor can influence the buyer to increase the batch size without making the buyer worse off. We also discuss how such a penalty scheme may be derived. Further, we have established the equivalence of VMI under deterministic demand with that of quantity discount models, thus highlighting the need to incorporate both cooperation and coordination perspectives while analysing SC collaboration mechanisms.

Suggested Citation

  • Abhishek Chakraborty & A.K. Chatterjee & Arqum Mateen, 2015. "A vendor-managed inventory scheme as a supply chain coordination mechanism," International Journal of Production Research, Taylor & Francis Journals, vol. 53(1), pages 13-24, January.
    • Handle: RePEc:taf:tprsxx:v:53:y:2015:i:1:p:13-24
    DOI: 10.1080/00207543.2014.921350
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    Cited by:

    1. Cai, Jianhu & Hu, Xiaoqing & Tadikamalla, Pandu R. & Shang, Jennifer, 2017. "Flexible contract design for VMI supply chain with service-sensitive demand: Revenue-sharing and supplier subsidy," European Journal of Operational Research, Elsevier, vol. 261(1), pages 143-153.
    2. Govindan, Kannan & Malomfalean, Andreea, 2019. "A framework for evaluation of supply chain coordination by contracts under O2O environment," International Journal of Production Economics, Elsevier, vol. 215(C), pages 11-23.
    3. Phan, Dinh Anh & Vo, Thi Le Hoa & Lai, Anh Ngoc & Nguyen, Thi Lan Anh, 2019. "Coordinating contracts for VMI systems under manufacturer-CSR and retailer-marketing efforts," International Journal of Production Economics, Elsevier, vol. 211(C), pages 98-118.
    4. Weißhuhn, Sandria & Hoberg, Kai, 2021. "Designing smart replenishment systems: Internet-of-Things technology for vendor-managed inventory at end consumers," European Journal of Operational Research, Elsevier, vol. 295(3), pages 949-964.
    5. Sainathan, Arvind & Groenevelt, Harry, 2019. "Vendor managed inventory contracts – coordinating the supply chain while looking from the vendor’s perspective," European Journal of Operational Research, Elsevier, vol. 272(1), pages 249-260.
    6. Chakraborty, Abhishek & Chatterjee, Ashis K., 2016. "A surcharge pricing scheme for supply chain coordination under JIT environment," European Journal of Operational Research, Elsevier, vol. 253(1), pages 14-24.
    7. Abhishek Chakraborty, 2021. "A surcharge pricing policy for supply chain coordination under the just-in-time (JIT) environment in the presence of backordering," OPSEARCH, Springer;Operational Research Society of India, vol. 58(4), pages 1049-1076, December.

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