A vendor-managed inventory model based on optimal retailers selection and reliability of supply chain

Abstract

One of the most common and successful approaches for the integrated supply chain management (SCM) is the vendor-managed inventory (VMI). In VMI, a vendor takes control of the inventory decisions for retailers. To establish a long-run relationship between the vendor and the retailer, it is necessary to consider two impactful factors: the vendors and retailers' reliability, and the optimal selection of retailers. For this purpose, the redundancy allocation problem (RAP), as an effective technique for increasing the reliability of vendors, is used in this paper. Also, the reliability of retailers as well as the reliability of the relationship between retailers and vendors are considered. In the retailer selection, process decisions on impactful criteria are simultaneously considered. For the retailers' selection, one analysis hierarchical process (AHP) is performed for each vendor, and the weights of retailers are obtained. Then, the obtained weights are plugged into the model as the inputs of the designed model. Since the developed model is a non-differentiable, non-convex, and mixed-integer function, genetic algorithm (GA) and particle swarm optimization (PSO) are leveraged to solve the formulated model. Finally, the efficiency of the presented method is verified through a case study with data collected from the electronic supply chain.

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