Zavanella Case

ARTICLE IN PRESS

Int. J. Production Economics 118 (2009) 225–232

Contents lists available at ScienceDirect

Int. J. Production Economics

journal homepage: www.elsevier.com/locate/ijpe

A one-vendor multi-buyer integrated production-inventory model: The ‘Consignment Stock’ case

Lucio Zavanella Ã, Simone Zanoni

` Dipartimento di Ingegneria Meccanica e Industriale, Universita degli Studi di Brescia, I 25133 Brescia, Italy

a r t i c l e in fo

Available online 30 August 2008 Keywords: Supply chain Inventory management Vendor-managed inventory

abstract

In recent years, companies have strengthened their supply agreements, and even the management of their inventories. To this aim, vendor-managed inventory (VMI) represents an interesting approach to stock monitoring and control, and it has been progressively considered and introduced in several companies. The research proposed investigates the way how a particular VMI policy, known as Consignment Stock (CS), may represent a successful strategy for both the buyer and the supplier. The most radical application of CS may lead to the suppression of the vendor inventory, as this actor uses the buyer’s warehouse to stock its finished products. As a counterpart, the vendor will guarantee that the quantity stored in the buyer’s warehouse will be kept between a maximum level and a minimum one, also supporting the additional costs eventually induced by stock-out conditions. The buyer will pick up from its store the quantity of material needed to meet its production plans and the material itself will be paid to the buyer according to the agreement signed. In previous studies, Braglia and Zavanella [2003. Modelling an industrial strategy for inventory management in supply chains: The ‘Consignment Stock’ case. International Journal of Production Research 41, 3793–3808] developed an analytical model of the CS policy, referring to a single-vendor and single-buyer situation. The same authors presented a comparison with...