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Coordination buyer and supplier with vendor managed inventory from the net present value perspective

Coordination buyer and supplier with vendor managed inventory from the net present value perspective
Coordination buyer and supplier with vendor managed inventory from the net present value perspective
This paper considers a two-level supply chain consisting of single-buyer single-supplier under deterministic conditions and constant demand rate. The main objective is to find optimal lot-sizing decisions and inventory policies, which derive from Net Present Value (NPV) framework. We study the models in two cases; individual and coordination decisions. In the individual case the buyer and the supplier act independently to optimise their profits or costs; while in the coordination case both actors are considered to determine the optimal variables to achieve profit (or cost) functions. The classic single-buyer single-supplier inventory model is applied in the individual model and Vendor-Managed Inventory (VMI) strategies are applied in the coordination models where the supplier is authorized to manage the buyer’s inventory and make all the replenishment decisions. The experimental results have shown that the optimal solution is given from a coordinated VMI approach derived from NPV framework. Furthermore, the numerical examples have shown that the optimal solution of VMI+ achieves a very good coordination. This model guarantees that the profit function for both players remains the same without coordination and increases as a result of coordination
2008-0050
136-144
Hamontree, C.
c7866600-dabb-4896-bd2e-2e3404af78c6
Ouelhadj, D.
607929bd-6ffd-49a2-b1d3-1cd673dff04f
Beullens, Patrick
893ad2e2-0617-47d6-910b-3d5f81964a9c
Hamontree, C.
c7866600-dabb-4896-bd2e-2e3404af78c6
Ouelhadj, D.
607929bd-6ffd-49a2-b1d3-1cd673dff04f
Beullens, Patrick
893ad2e2-0617-47d6-910b-3d5f81964a9c

Hamontree, C., Ouelhadj, D. and Beullens, Patrick (2012) Coordination buyer and supplier with vendor managed inventory from the net present value perspective. Lecture Notes in Management Science, 4, 136-144.

Record type: Article

Abstract

This paper considers a two-level supply chain consisting of single-buyer single-supplier under deterministic conditions and constant demand rate. The main objective is to find optimal lot-sizing decisions and inventory policies, which derive from Net Present Value (NPV) framework. We study the models in two cases; individual and coordination decisions. In the individual case the buyer and the supplier act independently to optimise their profits or costs; while in the coordination case both actors are considered to determine the optimal variables to achieve profit (or cost) functions. The classic single-buyer single-supplier inventory model is applied in the individual model and Vendor-Managed Inventory (VMI) strategies are applied in the coordination models where the supplier is authorized to manage the buyer’s inventory and make all the replenishment decisions. The experimental results have shown that the optimal solution is given from a coordinated VMI approach derived from NPV framework. Furthermore, the numerical examples have shown that the optimal solution of VMI+ achieves a very good coordination. This model guarantees that the profit function for both players remains the same without coordination and increases as a result of coordination

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More information

Published date: 2012
Additional Information: Proceedings of the 4th International Conference on Applied Operational Research, Bangkok, Thailand, 25-27 July 2012
Organisations: Operational Research

Identifiers

Local EPrints ID: 360711
URI: http://eprints.soton.ac.uk/id/eprint/360711
ISSN: 2008-0050
PURE UUID: 7c22fd30-0d87-4ecc-a6e2-bc56abc6f908
ORCID for Patrick Beullens: ORCID iD orcid.org/0000-0001-6156-3550

Catalogue record

Date deposited: 06 Jan 2014 09:18
Last modified: 11 Dec 2021 04:21

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Contributors

Author: C. Hamontree
Author: D. Ouelhadj

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