Effects of Yield and Lead-Time Uncertainty on Retailer-Managed and Vendor-Managed Inventory Management

Soonkyo Lee, Young Joo Kim, Taesu Cheong, Seung Ho Yoo

Research output: Contribution to journalArticle

Abstract

Generally, there are various elements of uncertainty in a supply chain. In particular, uncertainties in lead time, demand, and yield are very important in the semiconductor industry. Higher uncertainty can lead to bullwhip effects that can undermine the performance of the entire supply chain. This study examines the relationship between uncertainty in the supply chain and the outcome of inventory replenishment policies. Specifically, we analyze the effects of well-known uncertainties on manufacturer production quantity and retailer order quantity decisions in a decentralized supply chain. In addition, we also analyze and compare the effects of these uncertainties for the retailer-managed inventory and the vendor-managed inventory policies. Using numerical experiments, a comparative analysis of the two alternatives is conducted to determine suitable options for improving supply chain performance. In general, the performance of vendor-managed inventory is better than that of retailer-managed inventory, but we observe from the numerical experiments that there exist circumstances under which retailer-managed inventory shows better supply chain performance.

Original languageEnglish
Article number8922591
Pages (from-to)176051-176064
Number of pages14
JournalIEEE Access
Volume7
DOIs
Publication statusPublished - 2019 Jan 1

Keywords

  • decentralized supply chain
  • lead-time
  • optimal order quantity
  • optimal production quantity
  • retailer-managed inventory
  • single-period inventory
  • vendor-managed inventory
  • Yield

ASJC Scopus subject areas

  • Computer Science(all)
  • Materials Science(all)
  • Engineering(all)

Cite this