A Stochastic Single-vendor Single-buyer Model under a Consignment Agreement

  • Ou Tang
  • Simone Zanoni
  • Lucio Zavanella
Part of the IFIP — The International Federation for Information Processing book series (IFIPAICT, volume 246)


In the recent years, companies have begun to strengthen their supply agreements, such as sharing the management of inventories. This type of co-soperation implies that the members of the supply chain share information and arrange a mutual agreement on their performance targets. The increased interest on supply chain topics has attracted researchers’ attention to the problem of co-operation between the buyer and vendor, the two actors directly interacting in the supply mechanism. The present research investigates the way how a particular VMI policy, known as Consignment Stock (CS), may lead to a successful strategy for both buyer and vendor. The previous study [1] developed an analytical model of the CS policy, with reference to the centralised decision and deterministic settings. In order to fully explore the potentiality of CS policy, an extension of the model is proposed in this paper. The results indicate that the CS policy could be a strategic and profitable approach to improve supply chain performance in uncertain environments.


Supply Chain Safety Stock Stochastic Demand Optimal Order Quantity Vendor Manage Inventory 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


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Copyright information

© International Federation for Information Processing 2007

Authors and Affiliations

  • Ou Tang
    • 1
  • Simone Zanoni
    • 2
  • Lucio Zavanella
    • 2
  1. 1.Department of Management and EngineeringLinköping Institute of TechnologyLinköpingSweden
  2. 2.Dipartimento di Ingegneria Meccanica e IndustrialeUniversità degli Studi di BresciaBresciaItaly

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