- Title
- Lot-sizing for Vendor Managed Inventory
- Creator
- Evazabadian, Farshid
- Relation
- University of Newcastle Research Higher Degree Thesis
- Resource Type
- thesis
- Date
- 2021
- Description
- Research Doctorate - Doctor of Philosophy (PhD)
- Description
- Vendor Managed Inventory (VMI) is considered as one of the ways of improving the cooperation between the members of a supply chain. VMI refers to the partnership between a retailer and a vendor in which the vendor takes the responsibility of managing the retailer’s inventory. In this thesis, by developing some mathematical models, we clarify the differences between a supply chain that is operating under VMI with a traditional supply chain. We compare the performance of the major known VMI variants that are employed in industry and theory via a numerical study. We then show analytically that one of the VMI variants always minimises the supply chain cost. Therefore, we focus on that variant only and study its properties. First we determine the maximum benefit that can be obtained by that VMI variant analytically and then via a numerical study calculate the average expected benefit of that. Our results reveal that VMI can improve the supply chain cost by 1.7% on average. In the next step, we discuss how the profit created by VMI implementation should be divided among the members. We view this profit sharing problem as a cooperative game and employ Nash arbitration, Shapley, and Core methods for that. Next, we consider a case in which the vendor has some level of power that allows them some limited ability to alter retailer generated order quantities. In this case if the vendor’s power level is infinite, then practically, the vendor determines order quantities. Depending on the structure of initial order, this case might be equivalent to VMI case. However, when the vendor does not have any power, the orders are determined by the retailer and remain unchanged which is equivalent to Retailer Managed Inventory (RMI) case. That is, the RMI model with considering manipulative power for the vendor is a generalisation of RMI and VMI models and it can partially/completely fill the gap between these two models. We first determine the optimal solution for the vendor and retailer analytically for the case in which the demand is constant. Then for the case that the demand is not constant, by generating random instances and performing a regression analysis on the results we discover the relationship between the power level and the supply chain cost. Finally we study the relationship between information sharing and centralisation of decision making which are considered to be two major components of VMI. We show that when the retailer’s information about the demand is complete, i.e., the retailer knows the exact value of future demand, on average 95% of the benefit of VMI is derived solely from information sharing. However, when the retailer does not have any information about the future demand, on average 65% of benefit of VMI is derived from information sharing. This shows that the relative value of information sharing (compared to the centralisation of decision making) is dependent on the accuracy of the information that is shared. The results and insights of this thesis are beneficial for all the business parties who aim to implement VMI for their supply chains. The proposed insights related to VMI variants and profit sharing enable parties to build a win-win relationship with their VMI partners. As for the case in which the vendor has some levels of a manipulative power, the reults in this thesis allow the vendors to be aware of the effects of their manipulative actions on the supply chain profit. The last but not the least important outcome of this thesis is to determine how much of the VMI benefits can be obtained from information sharing solely and this would allow business parties to know when VMI implementation is necessary and when information sharing may be sufficient for their supply chains.
- Subject
- Vendor Managed Inventory (VMI); supply chain; VMI implementation; retailer
- Identifier
- http://hdl.handle.net/1959.13/1440294
- Identifier
- uon:41117
- Rights
- Copyright 2021 Farshid Evazabadian
- Language
- eng
- Full Text
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| Thumbnail | File | Description | Size | Format | |||
|---|---|---|---|---|---|---|---|
| View Details Download | ATTACHMENT01 | Thesis | 1 MB | Adobe Acrobat PDF | View Details Download | ||
| View Details Download | ATTACHMENT02 | Abstract | 138 KB | Adobe Acrobat PDF | View Details Download |