Numerical simulation-based investigation on vendor managed inventory model

T. Narendiranath Babu, D. Sujatha and D. Rama Prabha

International Journal of Business and Systems Research, 2013, vol. 7, issue 2, 168-179

Abstract: In a vendor managed inventory system, vendor or supplier is given the responsibilities of managing the customer's stock. The fundamental change is that the ordering phase of the process is saved, and the supplier is handed the authority and responsibility to take care of the entire replenishment process. This integrates operations between suppliers and buyers through information sharing and business process reengineering. This paper investigates the implementations of vendor managed inventory systems in a consumer goods industry. Once the data were setup in a spread sheet, two axis graphs were used for policy comparison. The case that is described in this paper is that of a fruit juice manufacturing firm located in India. The firm purchases over 100 items, such as packaging materials. The contribution of the packaging materials in the total inventory value is 83%, out of which 20% have a higher unit cost and a longer lead time. Therefore, a proper policy to manage the inventory of the packaging items is required.

Keywords: suppliers; information sharing; business process reengineering; vendor management; total inventory costs; numerical simulation; vendor managed inventory; VMI; modelling; consumer goods industry; fruit juice manufacturing; India; inventory management; replenishment process. (search for similar items in EconPapers)
Date: 2013
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