Decision-making rights allocation of service level in cycle review policy

In model of vendor-managed-inventory (VMI) cycle review policy, optimizing of service level and replenishment policies for the vendor, the retailer, and the supply chain as a whole, is analyzed separately. Decision-making rights allocation of service level is also analyzed based on cooperation of sales surplus cost sharing. The conclusion is that the vendor's optimal replenishment decision based on a contract restriction, which is confirmed by the vendor-retailer negotiation on distribute parameters of surplus cost, will be consistent with the optimal decision of the retailer and the chain. This consistency ensures the success implement of VMI cycle review policy.