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Article: The impact of demand variability and transshipment on vendor's distribution policies under vendor managed inventory strategy

TitleThe impact of demand variability and transshipment on vendor's distribution policies under vendor managed inventory strategy
Authors
KeywordsDemand Uncertainty
Optimal Distribution Policies
Supply Chain Management
Transshipment
Vmi
Issue Date2012
PublisherElsevier BV. The Journal's web site is located at http://www.elsevier.com/locate/ijpe
Citation
International Journal Of Production Economics, 2012, v. 139 n. 1, p. 42-48 How to Cite?
AbstractAs demand variability is amplified through supply chains due to the bullwhip effect, the celebrated vendor managed inventory (VMI) strategy, in which the supplier manages the retailer's inventory, allows suppliers and retailers to significantly improve supply chain performance. Under the VMI environment, several appealing questions arise, such as how to determine vendor's optimal distribution policy with transshipment and how the variance of demand affects the optimal policy. These questions are studied in this paper. We explore a two-echelon supply chain with one supplier and two retailers in a planning horizon of two periods. The vendor of the supply chain distributes the product to the retailers at the beginning of the first period, and then adjusts retailers' inventory positions by transshipping the stocks of the retailers based on updated sales figures at the beginning of the second period. By employing transshipment in the supply chain, we prove that a unique optimal distribution policy exists for maximizing the overall expected profit of the supply chain, and that the transshipment deployment increases both retailers' and vendor's optimal expected profit and retailers' service level for customers. We also demonstrate that transshipment can reduce the mismatch between demand and supply. Furthermore, we show that demand variability and correlation among retailers play important roles on the vendor's optimal distribution policy. © 2011 Elsevier B.V. All rights reserved.
Persistent Identifierhttp://hdl.handle.net/10722/155944
ISSN
2015 Impact Factor: 2.782
2015 SCImago Journal Rankings: 2.749
ISI Accession Number ID

 

DC FieldValueLanguage
dc.contributor.authorChen, Xen_US
dc.contributor.authorHao, Gen_US
dc.contributor.authorLi, Xen_US
dc.contributor.authorYiu, KFCen_US
dc.date.accessioned2012-08-08T08:38:32Z-
dc.date.available2012-08-08T08:38:32Z-
dc.date.issued2012en_US
dc.identifier.citationInternational Journal Of Production Economics, 2012, v. 139 n. 1, p. 42-48en_US
dc.identifier.issn0925-5273en_US
dc.identifier.urihttp://hdl.handle.net/10722/155944-
dc.description.abstractAs demand variability is amplified through supply chains due to the bullwhip effect, the celebrated vendor managed inventory (VMI) strategy, in which the supplier manages the retailer's inventory, allows suppliers and retailers to significantly improve supply chain performance. Under the VMI environment, several appealing questions arise, such as how to determine vendor's optimal distribution policy with transshipment and how the variance of demand affects the optimal policy. These questions are studied in this paper. We explore a two-echelon supply chain with one supplier and two retailers in a planning horizon of two periods. The vendor of the supply chain distributes the product to the retailers at the beginning of the first period, and then adjusts retailers' inventory positions by transshipping the stocks of the retailers based on updated sales figures at the beginning of the second period. By employing transshipment in the supply chain, we prove that a unique optimal distribution policy exists for maximizing the overall expected profit of the supply chain, and that the transshipment deployment increases both retailers' and vendor's optimal expected profit and retailers' service level for customers. We also demonstrate that transshipment can reduce the mismatch between demand and supply. Furthermore, we show that demand variability and correlation among retailers play important roles on the vendor's optimal distribution policy. © 2011 Elsevier B.V. All rights reserved.en_US
dc.languageengen_US
dc.publisherElsevier BV. The Journal's web site is located at http://www.elsevier.com/locate/ijpeen_US
dc.relation.ispartofInternational Journal of Production Economicsen_US
dc.subjectDemand Uncertaintyen_US
dc.subjectOptimal Distribution Policiesen_US
dc.subjectSupply Chain Managementen_US
dc.subjectTransshipmenten_US
dc.subjectVmien_US
dc.titleThe impact of demand variability and transshipment on vendor's distribution policies under vendor managed inventory strategyen_US
dc.typeArticleen_US
dc.identifier.emailYiu, KFC:cedric@hkucc.hku.hken_US
dc.identifier.authorityYiu, KFC=rp00206en_US
dc.description.naturelink_to_subscribed_fulltexten_US
dc.identifier.doi10.1016/j.ijpe.2011.05.005en_US
dc.identifier.scopuseid_2-s2.0-84863219716en_US
dc.identifier.isiWOS:000306877300006-
dc.publisher.placeNetherlandsen_US
dc.identifier.scopusauthoridChen, X=15032024700en_US
dc.identifier.scopusauthoridHao, G=7005935336en_US
dc.identifier.scopusauthoridLi, X=34869933700en_US
dc.identifier.scopusauthoridYiu, KFC=24802813000en_US
dc.identifier.citeulike9381091-

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