Vendor Managed Inventory is a well-known vendor-retailer coordination approach in supply chain management. If the inventory level for the retailer exceeds the upper limit, then the penalty cost is charged to the retailer. Furthermore, maximum allowable inventory level is set for the vendor to prevent the vendor from keeping much inventory. Single-vendor multi-retailer supply chain model with upper limit of inventory for vendor and retailers is studied. All the retailers’ are assumed to have the common cycle time, and a vendor manages retailers’ inventory and replenishes products. The mathematical formulation is introduced to minimize the total cost including the penalty cost violating the upper limit of inventory for retailers with the constraint of maximum allowable inventory level. The solution procedure based on Karush-Kuhn-Tucker(KKT) conditions is derived.

• 이동주(공주대학교 산업시스템공학과, Department of Industrial & Systems Engineering, Kongju National University) | Dongju Lee