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Title: An analytical study of the modification ability of distribution centers
Authors: Zhao, Qiuhong
Cheng, T. C. Edwin
Subjects: Vendor managed inventory system
Distribution center
Modification ability
Order-up-to-level policy
Issue Date: 1-May-2009
Publisher: Elsevier B.V.
Source: European journal of operational research, 1 May 2009, v. 194, no. 3, p. 901-910.
Abstract: This paper considers a two-level vendor managed inventory (VMI) system comprising a distribution center (DC) and a retailer. Both the DC's and the retailer's replenishment decisions follow the order-up-to-level policy and aim at maximizing the profit of the overall system. We critically examine the potential of the DC's ability to modify delivery decisions, identify and quantify the cost factors that influence the DC's modification ability, establish a relationship between the DC's location and its modification ability, and show the trade-off between the DC's modification ability and related costs. Our analysis provides a new insight into the role of the DC and reveals the full potential of the VMI system. Our findings and their practical implications, demonstrated with the aid of computational examples, are helpful for enhancing the practice of VMI at both strategic and operational levels.
Rights: European Journal of Operational Research © 2008 Elsevier B.V. The journal web site is located at
Type: Journal/Magazine Article
DOI: 10.1016/j.ejor.2008.01.008
ISSN: 0377-2217
Appears in Collections:LMS Journal/Magazine Articles

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