Storage constrained vendor managed inventory models with unequal shipment frequencies

Moncer Hariga, Mehmet Gumus and Abdelkader Daghfous

Omega, 2014, vol. 48, issue C, 94-106

Abstract: We consider a supply chain where a vendor manages its multiple retailers' stocks under a vendor managed inventory (VMI) contract that specifies upper stock limits at the retailers' premises and overstock costs for exceeding those limits. We formulate a mixed integer nonlinear program that minimizes total supply chain costs and allows unequal shipment frequencies to the retailers. We develop an algorithm to solve its relaxed version which provides a lower bound cost solution. We propose a cost efficient heuristic procedure to generate delivery schedules to the retailers. We conduct a sensitivity analysis to provide insights on the performance of the proposed heuristic. Results show that our heuristic finds optimal or near optimal solutions, and it proposes substantial savings compared to the total supply-chain cost in the cases where there is no VMI and where there is VMI but with equal shipment frequencies to retailers.

Keywords: Single vendor; Multiple retailers; Vendor managed inventory; Storage contract; Heuristic procedure (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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DOI: 10.1016/j.omega.2013.11.003

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