A Bi-Level Decision Model with the Hybrid Strategy for Vendor-Managed Inventory in Supply Chain Network

DOI

10.2991/978-94-6463-056-5_36How to use a DOI?

Keywords

Inventory management; Lateral transhipment; Vertical replenishment; Supply chain coordination

Abstract

In inventory optimization and supply chain coordination, one challenge for vendors and retailers is how to keep the inventory level as low as possible to cut cost. Vendor-managed inventory (VMI), as an efficient coordinated system, has aroused great concern in both research and commercial communities. Considering the VMI problem in single-vendor multi-retailer supply chains, this paper discusses a hybrid inventory management strategy combing vertical replenishment and lateral transhipment to reduce the inventory cost while increase the profits of retailers. To coordinate the optimization problem between the vendor and retailers, a bi-level inventory management decision-making model is developed to describe the relationship between vendor and multi-retailers, and the associated mathematical programming is proposed to determine the order price for vendor and inventory for retailers simultaneously. Based on hierarchical particle swarm optimization and fuzzy evaluation theory, an improved algorithm is then introduced to solve our mathematical programming problem and get Pareto front consisting of optimal solutions in a shorter time. These numerical results show that the bi-level decision-making model developed has some practical implications for the supply chain coordination, and the strategies with lateral transhipment and vertical replenishment are feasible and work better in inventory management.

Copyright

© 2023 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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TY  - CONF
AU  - Congli Su
AU  - Xinqiu Li
PY  - 2022
DA  - 2022/12/29
TI  - A Bi-Level Decision Model with the Hybrid Strategy for Vendor-Managed Inventory in Supply Chain Network
BT  - Proceedings of the 2022 2nd International Conference on Management Science and Software Engineering (ICMSSE 2022)
PB  - Atlantis Press
SP  - 252
EP  - 258
SN  - 2589-4900
UR  - https://doi.org/10.2991/978-94-6463-056-5_36
DO  - 10.2991/978-94-6463-056-5_36
ID  - Su2022
ER  -