Abstract: For a kind of salable goods,supply chain model of vendor management inventory(VMI)is established,on the basis of definite demand and a ready source of initial stock,but in short supply now.Then,this paper firstly deduces the optimum inventory replenishment quantities and profit function of each member under three supply chain contracts:non-coordination,integrated control,and VMI,and the implementation of VMI is proved that the profit of vendor may decrease.After that,VMI quantity discounts contract under symmetric and asymmetric information is designed by principal-agent theory.Finally,a numeric exapmple illustrates this coordination strategy is conductive in the implementation of VMI.

Key words: vendor managed inventory, coordination strategy, quantity discount