Vendor Managed Inventory System with Emission Related Costs

Abstract

The role of logistics and supply chain has come into prominence in helping the firms achieve their economic and sustainability objectives. Specifically, realignment of business processes, as characterized by supply chain coordination, has the potential to have a significant impact in this regard. In our study, we consider a supply chain with a single vendor and multiple retailers. Initially, we assume that the retailers take care of their respective replenishment decisions. Then, we show that by adopting vendor managed inventory, the organizations involved can benefit through cost reduction, and at the same time reduce their greenhouse gas emissions, thereby highlighting the role of supply chain coordination in meeting the twin objectives. We provide managerial and policy insights based on our numerical analysis.