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Computational and Mathematical Organization Theory

, Volume 24, Issue 3, pp 351–377 | Cite as

Evolutionary dynamics of two-actor VMI-driven supply chains

  • Fidel Torres
  • César García-Díaz
Manuscript

Abstract

The strategy of integration known as vendor-managed inventory (VMI), which allows the coordination of inventory policies between producers and buyers in supply chains, has long been considered a strategy for inventory cost reduction. Although the literature acknowledges the importance of understanding the dynamics of VMI implementation through evolutionary games, research in this topic still remains scarce. This paper studies the dynamics of strategic interaction of a producer–buyer supply chain under a newly developed VMI scheme, which makes use of a synchronization mechanism between the buyer and the producer replenishment cycles. By using this alternative VMI representation, we obtain the mathematical conditions that determine the degree of stability of evolutionarily stable strategies. As other evolutionary game theoretical approaches, we also find a lower bound for penalty costs that ensures a VMI contract, but most importantly, we also find how a VMI implementation might depend on the difference between production and demand rates, regardless of any penalty costs.

Keywords

Dynamical systems stability Evolutionary game theory Supply chain coordination Vendor-managed inventory 

Notes

Acknowledgements

The authors are grateful to Naly Rakoto for his insightful comments to early versions of this paper, and to the reviewers for their suggestions that have significantly improved our work. The second author thanks the Centre for Research in Social Simulation (CRESS) of the University of Surrey for hosting him during the final stages of this work. The usual disclaimer applies.

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Copyright information

© Springer Science+Business Media, LLC 2017

Authors and Affiliations

  1. 1.Department of Industrial EngineeringUniversidad de los AndesBogotáColombia

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