Study On Replenishment And Dispatching Model Based On Vendor Managed Inventory

Inventory management in Supply-chain has gained a name for being in chaos where each member tends to take control of his own part of stock. Manufactures, vendors and retailers hold complex inventory strategies which evidently lead to demand amplification. Hence, the whole supply-chain is unable to fulfill costumers' demand efficiently, the reason of constantly low level service. Vendormanaged inventory (VMI) is a supply-chain approach which offers a framework for synchronizing inventory and transportation decisions. The reason of a successful supply-chain usually indicates low inventory cost whilst high level of costumer service. VMI improves both in effective amount. VMI, as a whole new inventory management approach, could be the solution to the headache-causing inventory problem. Many companies in our country have took the first step in trying this approach, though few theoretical guidance that suits our own situation could be found, especially in integrated inventory control and shipment scheduling.Furthermore, VMI supplier has the liberty of controlling the downstream replenishment decisions rather than filling orders as they are placed. Thus, the approach enables vendors to integrate inventory and shipment, dramatically lower the total cost in supply-chain management. Thus came the SRSS (Stock Replenishment and Shipment Scheduling) problem approached by Cetinkaya and Lee in 2000.This article tries to summon the conclusions on SRSS published before, studies Stock Replenishment and Shipment Scheduling in supply-chain on time and amount bases separately. Follows the establishment of the modals, paremeter analysis are offered for comparison, relative changes on total cost under different service level also been studied. The article is based on a thorough study and research on VMI theoretically, which hopefully will be strong theory basement for companies in carrying out VMI.This article is combined with six chapters as follows:Chapter one, introductions on the study backgrounds, purpose and meaning in practice; also common study situations both inland and outland are offered; third, major study and conclusions of this article.Chapter two, thorough study on Vendor management inventory as a new approach in supply-chain which including background, definition, category, distinguishing feature, principles etc; in the study of VMI operating system, three categories are divided as bases of technology, contractions and theory which support the operation of VMI system; recent published studies on VMI are categorized and listed in the last part of this chapter.Chapter three, study by way of traditional inventory control theory, for a better understanding of the next chapter; thorough research on Cetinkaya and Lee's modal in 2000, and introduces on the characters of the modals about to be build.Chapter four, a two level supply-chain system has been set, and two VMI modals have been built according to prior hypothesis. Based on the modals built, we are able to get the minimum supply-chain cost which concludes vendor replenishment cost, dispatching cost, vendor stock holding cost and customer waiting lost. Hopefully with the guide of this thesis, we can reach the target of saving deliberation cost, lower stock level and together move customer service to a higher level.Chapter five, core of this research. Apart from simulation solving of VMI models, analysis for each parameter has been given. Owning to the fact that Time-based VMI model costs more under most circumstances, a conjecture has been given.In 5.4, deeper study on the condition when parameter w changes is given, cost in Time-based and Quantity-based model are compared. Results support the conjecture proposed before that customer waiting cost rises will show a gap in total cost between the two models build—high level customer service of Time-based VMI modal is capable of keeping total cost effectively while the other couldn't. This conclusion could be referred to in decision-making for the vendors. That is correspond to a certain customer waiting lost level there's certain strategy in modal to lower total cost and together elevate customer service level.Chapter six, summon up all the major results and fresh ideas, further research directions are pointed out in the end of research.On simplification of the model build by Cetinkaya and Lee, this article inducts every cost in a supply-chain vendor affords, and builds Time-based and Quantity-based VMI models. The research has show some fresh new ideas listed as the following points:1. A two level supply-chain inventory management system is set, most suitable delivery cycle T and most suitable inventory Q in Time-based VMI model are discussed under exponential distribution circumstance, same with the most suitable dispatching quantity Q~* and most desirable dispatch time K~* in a replenishment circle. Also, the impact analyses on total cost by the changing of parameters are given.2. The study on customer waiting cost successfully proved Cetinkaya's conjecture on the high level customer service of Time-based VMI modal is capable of keeping total cost effectively while the other couldn't.3. Analysis on the suitable environment and effects for both models enable vendors who tends to refer to this study as guidance make suitable choices under any circumstances, and to lower inventory cost in the whole chain which adds great value to optimization of modern supply-chain management.Also the optimization on inventory control is discussed from aspect of supply-chain. The above fresh ideas separate this research from recent studies on VMI.