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

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...

Full description

Saved in:
Bibliographic Details
Published in:International journal of production research 2015-01, Vol.53 (1), p.13-24
Main Authors: Chakraborty, Abhishek, Chatterjee, A.K., Mateen, Arqum
Format: Article
Language:English
Subjects:
Cooperation
Coordination
Demand analysis
Discounts
Equivalence
Fines & penalties
Inventory management
Operations research
quantity discount
Shipments
Studies
supply chain coordination
Supply chain management
Supply chains
vendor-managed inventory
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary: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.
ISSN:0020-7543
1366-588X
DOI:10.1080/00207543.2014.921350