A Supply Chain Model of Vendor Managed Inventory with Fuzzy Demand

Vendor-managed inventory (VMI) has become more and more popular in some supply chains. This paper considers a vendor managed inventory model including a single manufacturer and a single retailer with fuzzy demand and compares the profits in VMI system with those in RMI (retailer-managed inventory) system. A triangular fuzzy number is used to model the external demand, and the closed form solutions for VMI model are obtained. Numerical examples show that different from conventional studies that VMI always leads to a higher buyer's profit, but supplier's profit varies, VMI is not always an effective supply chain strategy that can realize many of the benefits obtainable in a fully integrated supply chain and the retailer also does not always benefit from VMI.