Evaluating vendor managed inventory systems: how incentives can benefit supply chain partners

Creative Commons License

ÖZTÜRK BİRİM Ş., SOFYALIOĞLU Ç.

Journal of Business Economics and Management, cilt.18, sa.1, ss.163-179, 2017 (SSCI) identifier

  • Yayın Türü: Makale / Tam Makale
  • Cilt numarası: 18 Sayı: 1
  • Basım Tarihi: 2017
  • Doi Numarası: 10.3846/16111699.2016.1266695
  • Dergi Adı: Journal of Business Economics and Management
  • Derginin Tarandığı İndeksler: Social Sciences Citation Index (SSCI), Scopus
  • Sayfa Sayıları: ss.163-179
  • Anahtar Kelimeler: distribution network, incentive systems, inventory management, modeling, performance, simulation, supply chain contracts, vendor managed inventory
  • Manisa Celal Bayar Üniversitesi Adresli: Evet

Özet

In a vendor managed inventory (VMI) system, the effects of financial incentives on the entire supply chain (SC) and on the individual firms are investigated in this study. To this end, order management, order replenishment and inventory control activities of a two-echelon SC are examined via modeling using discrete event simulation. By determining the appropriate parameters for the incentives with scenario analysis, balanced profit distribution between buyers and a supplier in VMI is established. Simulation outputs of the traditional model, VMI only and VMI with incentives models are compared based on profits with paired comparisons. In VMI with incentives, both buyers, and the supplier experience higher benefits than the traditional system. This study provides a new method which eliminates the unbalanced benefit distribution due to VMI and offers almost equal benefits to the participating firms. With financial incentives, firms are encouraged to share information with each other to work in a coordinated SC.