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Chinese Journal of Management Science ›› 2014, Vol. 22 ›› Issue (4): 42-50.

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The Replenishment Policy and Optimal Shelf Space of the Inventory Competitive Product Under VMI

YANG Jian-gong, QING Qian-long   

  1. The Center for Leisure and Service Research, Guangdong University of Finance, Guangzhou 510521, China
  • Received:2011-03-28 Revised:2013-03-16 Online:2014-04-20 Published:2014-04-23

Abstract: Based on previous research[1], by analyzing FKO model and taking the inventory competitive product (ICP)'s demand nature into consider, an appropriate model is built by using the dynamic programming method to determine the optimal shelf space which has never been considered in the traditional system. Chone hand, the optimality of supplier's multiperiod dynamic replenishment policy under VMI is verified, which to some extent develops the FKO model. On the other hand, it can be learnt that it is optimal for the ICP supplier to follow a replenishment-up-to policy under different VMI environments by a periodic review strategy. The supplier's multiperiod decisions for the optimal inventory levels held in the retailer's shelf space are myopic, thus the single-period optimal inventory level under VMI revenue-sharing contract can determine the optimal shelf space.

Key words: VMI, inventory competitive product, replenishment policy, optimal shelf space

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