Volume 53, Number 4, October 2019
|1343 - 1355
|09 August 2019
A vendor managed inventory on consignment with penalty as a supply chain coordination arrangement
School of Industrial Engineering, College of Engineering University of Tehran, Tehran, Iran
2 School of Business Administration, Department of Business Administration University of Macedonia, Thessaloniki, 54636 Greece
* Corresponding author: firstname.lastname@example.org
Accepted: 19 June 2018
This paper presents a mathematical two echelon vendor-managed inventory (VMI) model on consignment scheme in supply chain, in which the vendor pays a penalty for every extra unit which exceeds a specific upper limit to the buyer. In this arrangement the vendor can decide about the batch size he wants to transship to the buyer. Two cases are discussed in this paper; single vendor-single buyer and single vendor-two buyers. In this study after a review of coordination in supply chain and VMI on consignment, we discuss vendor-managed inventory scheme in comparison with traditional inventory control system. The optimal batch size is calculated and the paper investigates how a VMI on consignment arrangement with penalty can coordinate the supply chain. Numerical examples and sensitivity analysis is presented to illustrate the performance of model and the results.
Mathematics Subject Classification: 90B05
Key words: Vendor managed inventor / supply chain management / coordination / consignment stock
© EDP Sciences, ROADEF, SMAI 2019
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