This paper describes with the help of a case study how vendor managed inventory (VMI) model managers in real time the dynamic needs of supply chain process. Throughout the supply chain, VMI model is a way to cut inventory related costs and keep inventory levels low. VMI model helps companies to reduce the inventory‐associated costs by shifting the responsibility of managing and replenishing inventory to vendors. A study of a leading tyre manufacturer (XYZ) is reported. The supply chain of this company includes raw materials, manufacturing operations and the distribution network. The product range includes truck tyres, front‐end tractor tyres, scooter tyres, LCV tyres, and passenger radial tyres for both domestic and international market from manufacturing plants at different locations in the country. A prototype of VMI model based on simulation approach has been developed to illustrte how VMI model can enhance the performance of this organization by minimizing the inventory associated costs.
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