MODEL OF VENDOR MANAGED INVENTORY (VMI) IN THE TWO ECHELON SUPPLY CHAIN SYSTEM UNDER PROBABILISTIC DEMAND AND SERVICE LEVEL CONSTRAINTS

摘要

This research considers the application of Vendor Managed Inventory (VMI) in the two echelon supply chain (SC) inventory model consisting of single-supplier and single-buyer.Mathematical formulationsare developed for the system under discussion to determine the optimal order quantities of both supplier and buyer under probabilistic demand condition.The objective function is to rninimize the SC total cost with the implementation of the VMI.Numerical examplesare also included to show the effectiveness of the proposed model by comparing the results obtained before theconsideration of service level constraint (SLC) and after the integration of the SLC.