Title: Developing a new model for dynamic vendor managed inventory with considering time value of money

Authors: Behrooz Pourghannnad; Abolfazl Kazemi; Narges Shahraki; Payam Chiniforooshan; Mahdi Azizmohammadi

Addresses: Department of Industrial Engineering, University of Sciences and Culture, Avenue, Ashrafi e Esfahani Blvd., P.O. Box: 15632-3427, Tehran, Iran ' Faculty of Industrial and Mechanical Engineering, Islamic Azad University, Qazvin Branch, Nokhbegan Blvd., P.O. Box: 34185-1416, Qazvin, Iran ' Koc University, Rumelifeneri Köyü, 34450, Istanbul, Turkey ' Sciences and Research Branch, Islamic Azad University, Hesarak, Box: 775-14515, Tehran, Iran ' Faculty of Industrial and Mechanical Engineering, Islamic Azad University, Qazvin Branch, Nokhbegan Blvd., P.O. Box: 34185-1416, Qazvin, Iran

Abstract: This paper investigates a new dynamic two-echelon single-vendor multiple-buyer supply chain model under vendor managed inventory assumptions, which named dynamic vendor managed inventory, named DVMI, model. The DVMI model is formulated in order to find out the optimal sales quantity for each buyer at each period by maximising the profit of supply chain. All parameters are considered deterministic and delays in the payments are permissible. In addition, the relationship between sales quantity and sales price is assumed to be linearly. Implementation of proposed DVMI model is analysed with a case study that carried out at an Iranian dairy products company. The DVMI model is solved by using both LINGO and MATLAB genetic algorithm and direct search toolbox. Furthermore, sensitivity of model respect to the number of selected buyers in each period parameter is analysed.

Keywords: payment delays; dynamic VMI; vendor managed inventory; DVMI; net present value; NPV; supply chain management; SCM; dynamic modelling; two-echelon supply chains; profit maximisation; Iran; dairy products; genetic algorithms.

DOI: 10.1504/IJLSM.2015.068428

International Journal of Logistics Systems and Management, 2015 Vol.20 No.3, pp.411 - 427

Received: 07 Oct 2013
Accepted: 16 Dec 2013
Published online: 15 Apr 2015 *

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