Study Of Inventory Optimization By Applying VMI Model

Inventory management has been brothering business for a very long time. Excess inventory takes up a lot of liquidity; on the other hand low inventoryincrease the risk of plant shut down or customer complaints caused by supply interruption. Conventional inventory management sometime is isolated study of the company's sales, production planning, so that they can calculate the minimum hold inventory. This calculation looks like optimal. But since it ignores the upstream and downstream relationships, the result often fails to benefit the entire supply chain to maximize value or minimize costs. VMI, vendor managed inventory model has improved the situation.This study takes H Company as an example. By analyzing the inventory management problems, the feasibility and necessity of VMI mode for H corporate are studied.Byintroducing VMI theory and methods, we designed VMI management model for H company, followed the implementation of the program, and the VMI performance were assessed as well.This study providesimplementation and application guidance to VMI management for those related companies.