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Title: Vendor managed inventory contracts – coordinating the supply chain while looking from the vendor’s perspective
Authors: Sainathan, Arvind
Groenevelt, Harry
Keywords: Supply Chain Management
Business::Operations management
Issue Date: 2018
Source: Sainathan, A., & Groenevelt, H. (2019). Vendor managed inventory contracts – coordinating the supply chain while looking from the vendor’s perspective. European Journal of Operational Research, 272(1), 249-260. doi:10.1016/j.ejor.2018.06.028
Series/Report no.: European Journal of Operational Research
Abstract: The paper studies coordination of a supply chain when the inventory is managed by the vendor (VMI). We also provide a general mathematical framework that can be used to analyze contracts under both retailer managed inventory (RMI) and VMI. Using a simple newsvendor scenario with a single vendor and single retailer, we study five popular coordinating supply chain contracts: buyback, quantity flexibility, quantity discount, sales rebate, and revenue sharing contracts. We analyze the ability of these contracts to coordinate the supply chain under VMI when the vendor freely decides the quantity. We find that even though all of them coordinate under RMI, quantity flexibility and sales rebate contracts do not generally coordinate under VMI. Furthermore, buyback and revenue sharing contracts are equivalent. Hence, we propose two new contracts which coordinate under VMI (one of which coordinates under RMI too, provided a well-known assumption holds). Finally, we extend our analysis to consider multiple independent retailers with the vendor incurring linear or convex production cost, and show that our results are qualitatively unchanged.
ISSN: 0377-2217
DOI: 10.1016/j.ejor.2018.06.028
Rights: © 2018 Elsevier B. V. All rights reserved. This paper was published in European Journal of Operational Research and is made available with permission of Elsevier B. V.
Fulltext Permission: open
Fulltext Availability: With Fulltext
Appears in Collections:NBS Journal Articles

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