Management on the Risk of out of Stock in VMI

摘要

It has been proved by a great deal of literature that VMI can reduce the Bullwhip Effect and strengthen the competition power of the whole supply chain. Some research findings indicate that the suppliers' profit would go up with the increase of retailers. However, in this situation, due to the limits of the related factors (such as the supplier's supply ability) taken into account, the probability of Out Of Stock would be also high, which as a result reduces the efficiency of the supply chain. This paper introduces the risk factor into the profit model established on the basis of one supplier and several retailers, and analyzes the influence by the change of the punishment price so as to adjust the punishment price to control the risk.