Tri-level decision-making for decentralized vendor-managed inventory

Han, J; Lu, J; Zhang, G

Tri-level decision-making for decentralized vendor-managed inventory

Han, J Lu, J

Zhang, G

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Publication Type:: Journal Article
Citation:: Information Sciences, 2017, 421 pp. 85 - 103
Issue Date:: 2017-12-01

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Field	Value	Language
dc.contributor.author	Han, J	en_US
dc.contributor.author	Lu, J https://orcid.org/0000-0003-0690-4732	en_US
dc.contributor.author	Zhang, G https://orcid.org/0000-0003-3960-0583	en_US
dc.date.available	2020-05-25T19:05:38Z
dc.date.issued	2017-12-01	en_US
dc.identifier.citation	Information Sciences, 2017, 421 pp. 85 - 103	en_US
dc.identifier.issn	0020-0255	en_US
dc.identifier.uri	http://hdl.handle.net/10453/124910
dc.description.abstract	© 2017 Elsevier Inc. Vendor-managed inventory (VMI) is a common inventory management policy which allows the vendor to manage the buyer's inventory based on the information shared in the course of supply chain management. One challenge in VMI is that both the vendor and buyer are manufacturers who try to achieve an inventory as small as possible or even a zero inventory; it is therefore difficult to manage inventory coordination between them. This paper considers a decentralized VMI problem in a three-echelon supply chain network in which multiple distributors (third-party logistics companies) are selected to balance the inventory between a vendor (manufacturer) and multiple buyers (manufacturers). To handle this issue, this paper first proposes a tri-level decision model to describe the decentralized VMI problem, which allows us to examine how decision members coordinate with each other in respect of decentralized VMI decision-making in a predetermined sequence. We then turn our attention to the geometry of the solution space and present a vertex enumeration algorithm to solve the resulting tri-level decision model. Lastly, a computational study is developed to illustrate how the proposed tri-level decision model and solution approach can handle the decentralized VMI problem. The results indicate that the proposed tri-level decision-making techniques provide a practical way to design a novel manufacturer-manufacturer (vendor-buyer) VMI system where third-party logistics are involved.	en_US
dc.relation	http://purl.org/au-research/grants/arc/DP140101366
dc.relation.ispartof	Information Sciences	en_US
dc.relation.isbasedon	10.1016/j.ins.2017.08.089	en_US
dc.subject.classification	Artificial Intelligence & Image Processing	en_US
dc.title	Tri-level decision-making for decentralized vendor-managed inventory	en_US
dc.type	Journal Article
utslib.citation.volume	421	en_US
utslib.for	0102 Applied Mathematics	en_US
utslib.for	0802 Computation Theory and Mathematics	en_US
utslib.for	0906 Electrical and Electronic Engineering	en_US
utslib.for	01 Mathematical Sciences	en_US
utslib.for	08 Information and Computing Sciences	en_US
utslib.for	09 Engineering	en_US
pubs.embargo.period	Not known	en_US
pubs.organisational-group	/University of Technology Sydney
pubs.organisational-group	/University of Technology Sydney/Faculty of Engineering and Information Technology
pubs.organisational-group	/University of Technology Sydney/Faculty of Engineering and Information Technology/School of Computer Science
pubs.organisational-group	/University of Technology Sydney/Strength - CAI - Centre for Artificial Intelligence
utslib.copyright.status	closed_access
pubs.publication-status	Published	en_US
pubs.volume	421	en_US

Abstract:

© 2017 Elsevier Inc. Vendor-managed inventory (VMI) is a common inventory management policy which allows the vendor to manage the buyer's inventory based on the information shared in the course of supply chain management. One challenge in VMI is that both the vendor and buyer are manufacturers who try to achieve an inventory as small as possible or even a zero inventory; it is therefore difficult to manage inventory coordination between them. This paper considers a decentralized VMI problem in a three-echelon supply chain network in which multiple distributors (third-party logistics companies) are selected to balance the inventory between a vendor (manufacturer) and multiple buyers (manufacturers). To handle this issue, this paper first proposes a tri-level decision model to describe the decentralized VMI problem, which allows us to examine how decision members coordinate with each other in respect of decentralized VMI decision-making in a predetermined sequence. We then turn our attention to the geometry of the solution space and present a vertex enumeration algorithm to solve the resulting tri-level decision model. Lastly, a computational study is developed to illustrate how the proposed tri-level decision model and solution approach can handle the decentralized VMI problem. The results indicate that the proposed tri-level decision-making techniques provide a practical way to design a novel manufacturer-manufacturer (vendor-buyer) VMI system where third-party logistics are involved.

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http://hdl.handle.net/10453/124910