An analysis on vendor hub

Abstract

Pioneered by Wal-Mart, Vendor Managed Inventory is an important initiative that aids in the coordination of the supply chain. The study of Vendor Managed Inventory has received much attention from the industry and academia. Though numerous studies have been done on building a theoretical framework for Vendor Managed Inventory, research on developing a model or heuristic for Vendor Managed Inventory is nascent. Current Vendor Managed Inventory literatures on issues such as supplier selection are limited. In a effort to fill up this gap, this dissertation extends Cetinkaya and Leea??s (2000) model and examine issues such as supplier selection, order splitting in Vendor Managed Inventory through the use of a simulation model. In addition, current industrial practice is also examined and a comparison is made between Just-in-Time and Vendor Managed Inventory systems. Inferences obtained from the analysis of the simulation results are used to explain the rationale of industry policies and a basis of propositions made regarding the usage of Vendor Managed Inventory and Just-In-Time.