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An effective coordination strategy for performance improvement of vendor managed inventory |
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PP: 69-76 |
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Author(s) |
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Wei Hu,
Fu-Yuan Xu,
Bin Xiong,
De-yi Tai,
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Abstract |
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| Aiming at solving the coordination strategy problems in a VMI supply chain with low total supply chain profit, unbalanced
revenue distribution mechanism and unreasonable inventory replenishment quantities, an improved VMI model for a supply chain with
one supplier and one retailer is presented. In the Improved VMI model, the influences of the inventory holding cost and the stock out
cost and the promotion effort level of downstream entity under the stochastic demand are considered, which makes the model closer
to the actual situation. By utilizing the distribution factor, the profits between the supplier and the retailer are redistributed, and the
win-win outcome is ensured. In order to achieve the optimum of the overall profit of the channel-wide system, the starting point of
negotiations with the supplier and the retailer is established and a Lagrange function is introduced. In addition, numerical simulation
experiments are conducted to show the utility of the improved model proposed in this paper. |
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