Vendor Managed Inventory for Multi-Vendor Single-Manufacturer Supply Chain: A Case Study of Instant Noodle Industry

Authors

  • Huynh Tan Phong Thammasat University
  • Pisal Yenradee Thammasat University

DOI:

https://doi.org/10.4186/ej.2020.24.6.91

Keywords:

supply chain management (SCM), multi-vendor, single manufacturer, vendor managed inventory (VMI), instant noodle supply chain, multiple truck sizes

Abstract

This paper develops a vendor-managed inventory (VMI) model for a multiple-vendor, single-manufacturer supply chain, in which the first stage members can be traders and/or producers and the second stage member is a manufacturer. The model utilizes a realistic transportation cost which is dependent on the sizes (small- or medium-sized) of trucks. It can determine suitable sizes and numbers of trucks that minimize the transportation cost. A genetic algorithm (GA) technique, implemented in MATLAB software, is used to determine the best solution to the problem. A case study in the instant noodle industry is conducted to demonstrate the usefulness of the proposed model. Based on the experimental results, the VMI model has reasonable behaviors using sensitivity analysis. To reduce the inventory level of raw materials, the penalty cost may be set at a relatively high level or the upper inventory limits may be set at relatively low levels, without significantly affecting the average total cost per period of the entire supply chain. When the vendors are allowed to make decision independently, the solution is still the same as the solution from the proposed VMI model, which means that the manufacture does not take advantage of the vendors.

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Author Biographies

Huynh Tan Phong

Logistics and Supply Chain Systems Engineering Program, Sirindhorn International Institute of Technology, Thammasat University, Pathum Thani 12120, Thailand

Pisal Yenradee

Logistics and Supply Chain Systems Engineering Program, Sirindhorn International Institute of Technology, Thammasat University, Pathum Thani 12120, Thailand

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Published In
Vol 24 No 6, Nov 30, 2020
How to Cite
[1]
P. Huynh and P. Yenradee, “Vendor Managed Inventory for Multi-Vendor Single-Manufacturer Supply Chain: A Case Study of Instant Noodle Industry”, Eng. J., vol. 24, no. 6, pp. 91-107, Nov. 2020.