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Storage constrained vendor managed inventory models with unequal shipment frequencies
Institution:1. Industrial Engineering Department, College of Engineering, American University of Sharjah, UAE;2. Department of Marketing, School of Business and Management, American University of Sharjah, UAE;1. Faculty of Industrial and Mechanical Engineering, Qazvin Branch, Islamic Azad University, Qazvin, Iran;2. Department of Industrial Engineering, Sharif University of Technology, P.O. Box 11155-9414, Azadi Ave, Tehran 1458889694, Iran;3. Department of Science and Technology, Universiti Kebangsaan Malaysia, Bangi, 43600 Selangor, Malaysia;4. Department of Mechanical Engineering, Faculty of Engineering, University of Malaya, 50603 Kuala Lumpur, Malaysia;1. Department of Industrial and Systems Engineering, School of Engineering, Tecnológico de Monterrey, Ave. E.Garza Sada 2501 Sur, C.P. 64 849 Monterrey, Nuevo León, Mexico;2. Department of Marketing and International Business, School of Business, Tecnológico de Monterrey, Ave. E.Garza Sada 2501 Sur, C.P. 64 849 Monterrey, Nuevo León, Mexico;3. Department of Industrial Engineering, Petra Christian University, Surabaya, Indonesia;4. Department of Industrial and Systems Engineering, Chung Yuan Christian University, Chung Li 320, Taiwan;1. Department of Industrial Engineering and Management Chaoyang University of Technology Taichung 413, Taiwan;2. Department of Accounting, College of Management National Changhua University of Education Changhua 500, Taiwan;3. Department of Industrial Engineering & Systems Management Feng Chia University Taichung 407, Taiwan;1. Department of Mathematics, Sonamukhi College, Bankura 722 207, India;2. Department of Mathematics, Kazi Nazrul University, Asansol 713 340, India;3. Department of Mathematics, Midnapore College(Autonomous), Midnapore 721 101, India
Abstract:We consider a supply chain where a vendor manages its multiple retailers' stocks under a vendor managed inventory (VMI) contract that specifies upper stock limits at the retailers' premises and overstock costs for exceeding those limits. We formulate a mixed integer nonlinear program that minimizes total supply chain costs and allows unequal shipment frequencies to the retailers. We develop an algorithm to solve its relaxed version which provides a lower bound cost solution. We propose a cost efficient heuristic procedure to generate delivery schedules to the retailers. We conduct a sensitivity analysis to provide insights on the performance of the proposed heuristic. Results show that our heuristic finds optimal or near optimal solutions, and it proposes substantial savings compared to the total supply-chain cost in the cases where there is no VMI and where there is VMI but with equal shipment frequencies to retailers.
Keywords:Single vendor  Multiple retailers  Vendor managed inventory  Storage contract  Heuristic procedure
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