Abstract
We investigate the impact of four variants of supplier managed inventory on total costs and cost distribution in a capital goods supply chain consisting of a parts supplier who delivers parts to an original equipment manufacturer’s assembly plant. The four supplier managed inventory variants differ in the components of inventory costs that the supplier has to carry. The performance of the supplier managed inventory relationships is benchmarked with the situation where the assembly plant manages the inventories. Interesting managerial insights follow from this comparison.
Originally published in:
OR Spectrum (2009) 31:167–194
DOI 10.1007/s00291-007-0105-4
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Preview
Unable to display preview. Download preview PDF.
References
Achabal DD, McIntyre SH, Smith SA, Kalyanam K (2000) A decision support system for vendor managed inventory. J Retailing 76:430–454
Andel T (1996) Manage inventory, own information. Logistics Today 37:54–58
Aviv Y, Federgruen A (1998) The operational benefits of information sharing and vendor managed inventory (VMI) programs. Working paper. Olin School of Business, Washington University, St Louis
Axsäter S (2001) A note on stock replenishment and shipment scheduling for vendor-managed inventory systems. Manage Sci 47:1306–1310
Bell W, Dalberto L, Fisher M, Greenfield A, Jaikumar R, Kedia P, Mack R, Prutzman P (1983) Improving the distribution of industrial gases with an on-line computerized routing and scheduling optimizer. Interfaces 13:4–23
Bertazzi L, Paletta G, Speranza MG (2002) Deterministic order-up-to level policies in an inventory routing problem. Transport Sci 36:119–132
Bertazzi L, Paletta G, Speranza MG (2005) Minimizing the total cost in an integrated vendor-managed inventory system. J Heuristics 11:393–419
Bertrand JWM (1985) Multiproduct optimal batch sizes with in-process inventories and multi work centers. IIE Trans 17:157–163
Burke M (1996) It's time for vendor managed inventory. Ind Distribution 85:90
Cachon G (2001) Managing a retailer's shelf space, inventory, and transportation. Manufact Service Opera Manage 3:211–229
Campbell AM, Clarke L, Kleywegt A, Savelsbergh MWP (1998) The inventory routing problem. In: Crainic TG, Laporte G (eds) Fleet management and logistics. Kluwer, Boston, pp 95–113
Çetinkaya S, Lee CY (2000) Stock replenishment and shipment scheduling for vendor-managed-inventory systems. Manage Sci 46:217–232
Chaouch BA (2001) Stock levels and delivery rates in vendor-managed inventory programs. Product Oper Manage 10:31–44
Chen F (2003) Information sharing and supply chain coordination. In: de Kok AG, Graves SC (eds) Hand-books in operations research and management science vol 11. Supply chain management: design, coordination and operation. Elsevier, Amsterdam
Cheung KL, Lee HL (2002) The inventory benefit of shipment coordination and stock rebalancing in a supply chain. Manage Sci 48:300–306
Clark TH, McKenney JL (1994) Campbell Soup Company: a leader in continuous replenishment innovations. Harvard Business School Case. Harvard Business School, Harvard University, Cambridge
Cottrill K (1997) Reforging the supply chain. J Business Strategy 18:35–39
Cox DR (1962) Renewal theory. Methuen, London
De Kok AG (1991) Basics of inventory management: part 1 Renewal theoretic background. Research Memorandum FEW 520. Department of Economics, Tilburg University, Tilburg
Disney SM, Towill DR (2002) A procedure for the optimization of the dynamic response of a vendor managed inventory system. Comput Ind Eng 43:27–58
Disney SM, Potter AT, Gardner BM (2003) The impact of vendor managed inventory on transport operations. Transport Res Part E 39:363–380
Dong Y, Xu K (2002) A supply chain model of vendor managed inventory. Transport Res Part E 38:75–95
Fry MJ, Kapuscinski R, Olsen TL (2001) Coordinating production and delivery under a (z,Z)-type vendor-managed-inventory contract. Manufact Service Opera Manage 3:151–173
Gerber N (1991) Objective comparisons of consignment, just-in-time and stockless. Hospital Mat Manage Quart 13:10–17
Hammond J (1994) Barilla SpA (A) and (B). Harvard Business School Case. Harvard Business School, Harvard University, Cambridge
Holmström J (1998) Implementing vendor-managed inventory the efficient way. Product Inventory Manage J 39:1–5
Huang GQ, Lau JSK, Mak KL (2003) The impacts of sharing production information on supply chain dynamics: a review of the literature. Int J Product Res 41:1483–1517
Kaipia R, Holmström J, Tanskanen K (2002) VMI: what are you losing if you let your customers place orders. Product Plan Control 14:17–25
Karmarkar US (1987) Lot sizes, lead times and in-process inventories. Manage Sci 33:409–418
Karmarkar US, Kekre S, Kekre S (1985) Lot sizing in multi-item, multi-machine job shops. IIE Trans 17:290–298
Kikkert I (2006) Supplier managed and owned inventory bij Neways Advanced Applications B.V. Master Thesis. Technische Universiteit Eindhoven, The Netherlands
Kingman JFC (1961) The single server queue in heavy traffic. Proc Cambridge Philos Soc 57:902–904
Lambrecht MR, Ivens PL, Vandaele NJ (1998) ACLIPS: A capacity and lead time integrated procedure for scheduling. Manage Sci 44:1548–1561
Lee HL, Padmanabhan V, Whang S (1997) Information distortion in a supply chain: the bullwhip effect. Manage Sci 43:546–558
Mishra BK, Raghunathan S (2004) Retailer- vs. vendor-managed inventory and brand competition. Manage Sci 50:445–457
Sahin F, Robinson EP (2002) Flow coordination and information sharing in supply chains: review, implications, and directions for further research. Decision Sci 33:505–536
Silver EA, Pyke DF, Peterson R (1998) Inventory management and production planning and scheduling. Wiley, New York
Simchi-Levi D, Kaminsky P, Simchi-Levi E (2000) Designing and Managing the supply chain. McGraw-Hill, Boston
Thomas DJ. Griffin PM (1996) Coordinated supply chain management. Eur J Oper Res 94:1–15
Tyan J, Wee HM (2003) Vendor managed inventory: a survey of the Taiwanese grocery industry. J Purchas Supply Manage 9:11–18
Valentini G, Zavanella L (2003) The consignment stock of inventories: industrial case and performance analysis. Int J Product Econ 81–82:215–224
Vandaele NJ, Lambrecht MR, De Schuyter N, Cremmery R (2000) Spicer off-highway products division-brugge improves its lead-time and scheduling performance. Interfaces 30:83–95
Vandaele N, Van Nieuwenhuyse I, Claerhout D, Cremmery R (2007) Load-based POLCA: an integrated material control system for multiproduct, multimachine job shops. Product Oper Manage (in press)
Van Nyen PLM, Bertrand JWM, Van Ooijen HPG, Vandaele NJ (2005) A heuristic to control integrated multi-product multi-machine production–inventory systems with job shop routings and stochastic arrival, set-up and processing times. OR Spectrum 27:399–434
PLM Van Nyen (2005) The integrated control of production–inventory systems. PhD Thesis Technische Universiteit Eindhoven. The Netherlands. Available online at: http://alexandria.tue.nl/extra2/200513458_OnlinePDF.pdf
Waller M, Johnson ME, Davis T (1999) Vendor-managed inventory in the retail supply chain. J Business Logistics 20:183–203
Whitt W (1983) The queueing network analyzer. Bell System Tech J 62:2779–2815
Whitt W (1994) Towards better multi-class parametric decomposition approximations for open queueing networks. Ann Oper Res 48:221–24
Zheng Y, Zipkin PH (1990) A queueing model to analyze the value of centralized inventory information. Oper Res 38:296–307
Zipkin PH (1986) Models for design and control of stochastic multi-item batch production systems. Oper Res 34:91–104
Author information
Authors and Affiliations
Corresponding author
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2009 Springer-Verlag Berlin Heidelberg
About this chapter
Cite this chapter
Van Nyen, P., Bertr, J., Van Ooijen, H., Vandaele, N.J. (2009). Supplier managed inventory in the OEM supply chain: the impact of relationship types on total costs and cost distribution. In: Meyr, H., Günther, HO. (eds) Supply Chain Planning. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-540-93775-3_9
Download citation
DOI: https://doi.org/10.1007/978-3-540-93775-3_9
Published:
Publisher Name: Springer, Berlin, Heidelberg
Print ISBN: 978-3-540-93774-6
Online ISBN: 978-3-540-93775-3
eBook Packages: Business and EconomicsBusiness and Management (R0)