Optimum Ordering Policy in Vendor Managed Inventory (VMI) with Discrete Demand and Backorder

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Mofidi, Shahab | 2012

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Type of Document: M.Sc. Thesis
Language: Farsi
Document No: 45096 (01)
University: Sharif University of Technology
Department: Industrial Engineering
Advisor(s): Haji, Rasoul
Abstract:
This research deals with a supply chain consisting of one vendor and several retailers. Every retailer orders a fixed discrete quantity in fixed discrete time intervals. Order quantity and order cycle of each retailer could be different from the others. The vendor orders the required quantity to a supplier to fulfill the received demands. Also the vendor orders a discrete quantity, which will be immediately received at the vendor’s warehouse. In this supply chain system, the lead-time is assumed to be zero and shortage is allowed for vendor. The aim is to find minimum vendor’s inventory cost. We proposed a backward Dynamic Programming algorithm for the model. The algorithm creates vendor’s ordering repetitive patterns. To decrease the complexity of the algorithm, a Greedy algorithm is developed. The patterns are used as inputs in the Greedy algorithm. Behavior of this model has been compared with a similar model in which the shortage is not allowed. The results show that both models have a similar behavior but the model presented in this paper has lower inventory cost
Keywords:
Supply Chain Management (SCM) ; Vendor Managed Inventory (VMI) ; Discrete Demand ; Backordered Demand ; Dynamic Programming

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