Our method for modeling inventory in the supply chain design problem incorporates specifics of both the inventory management system and the replenishment channel options. A vendor managed replenishment channel is one of the options. The impact can be measured under varying inventory management system scenarios. We have shown that using distance as an approximation of multi-stop transportation cost can lead to poor supply chain designs. We have also developed a simulation that measures the impact of a VMI strategy.
Initial results show potential for dramatic reduction in replenishment time.
The supply chain inventory model has also been applied to mode selection, truck or rail, for DC replenishment channels. Les Ellis Publications TLI reports Sponsors This work has been supported in part by Ford Motor Company, the National Science Foundation, and the Office of Naval Research. All rights reserved.