Knowledge management system for operating parameters in two-echelon VMI supply chains

Abstract

This paper presents an information technology (IT)-driven normative model of vendor-managed inventory system in a two-echelon supply chain comprising of m vendors and n buyers, referred as Two-echelon Multiple Vendor Multiple Buyers Supply Chain (TMVMBSC). The operational parameters to the above model are: sales quantities and their corresponding sales price of the buyers and transaction quantities that determine channel profit of supply chain and their respective contract prices between vendors and buyers. In order to find out the optimal transaction quantities for each buyer in TMVMBSC problem, a mathematical model is formulated. Optimal sales price and acceptable contract price at different revenue share are subsequently derived with the optimal transaction quantity. A knowledge management system (KMS) using genetic algorithm is proposed to solve this TMVMBSC problem, which belongs to nonlinear integer programming problem (NIP). The proposed KMS is evaluated for its solution quality and computational time. Besides, the robustness of model with its parameters, which fluctuate frequently and are sensitive to operational features, is analysed.