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

Kefeng Xu and Mark T. Leung

International Journal of Production Economics, 2009, vol. 117, issue 2, 271-285

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.

Keywords: Supply; chain; management; Vendor-managed; inventory; Service; operations; Logistics; Retail; channel (search for similar items in EconPapers)
Date: 2009
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:proeco:v:117:y:2009:i:2:p:271-285

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