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Chinese Journal of Management Science ›› 2025, Vol. 33 ›› Issue (10): 197-211.doi: 10.16381/j.cnki.issn1003-207x.2022.2521

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Research on VMI Inventory Decision Model for Assembly System under Supplier's Yield Uncertainty

Jianhu Cai1,2, Zhengang Cao2, Qian Zhou3, Wenliang Bian4,5()   

  1. 1.Experimental Center of Data Science and Intelligent Decision-Making,Hangzhou Dianzi University,Hangzhou 310018,China
    2.School of Management,Hangzhou Dianzi University,Hangzhou 310018,China
    3.School of Management,Zhejiang University of Technology,Hangzhou 310023,China
    4.School of Economics and Management,Beijing Jiaotong University,Beijing 100044,China
    5.Research Center of Central & Eastern Europe,Beijing Jiaotong University,Beijing 100044,China
  • Received:2022-11-22 Revised:2023-03-29 Online:2025-10-25 Published:2025-10-24
  • Contact: Wenliang Bian E-mail:wlbian@bjtu.edu.cn

Abstract:

The timely supply of various components is the key to the efficient operation for the assembly system. However, the supplier’s yield uncertainty makes the timely supply of the components unable to be guaranteed, and the insufficient supply of any kind of the component will lead to the failure of the assembly. Moreover, many assembly systems operate under vendor-managed inventory (VMI) mode, which makes production decisions more difficult for the supplier whose yield is uncertain. Thus, the suppliers’ production decisions in the assembly system are studied under VMI mode while considering yield uncertainty. An assembly system with two suppliers and one assembler is constructed, and the system operates under VMI. Two different situations are analyzed: Only one supplier’s yield is uncertain and both suppliers’ yields are uncertain. In each situation, the assembler’s commitment order quantity contract and the supplier’s replenishment strategy are adopted separately in an attempt to improve the performance of the assembly system. Both suppliers’ optimal input decisions in different cases are obtained. On this basis, the effects of the assembler’s commitment order quantity contract and suppliers’ replenishment strategy on the suppliers’ optimal input quantities and the assembly system members’ expected profits are discussed. The results show that: in the two situations, the assembly system can achieve a Pareto improvement under specific conditions after introducing the commitment order quantity contract; when only one supplier’s yield is uncertain, for any given commitment order quantity higher than the market demand, there exists a corresponding boundary value of the shortage cost, and if the actual shortage cost exceeds this boundary, the assembler can obtain a higher expected profit by introducing the commitment order quantity contract; the supplier’s replenishment strategy can always lead to a Pareto improvement of the assembly system. Furthermore, main conclusions are verified by numerical analysis. In general, the cooperation schemes provided in this paper can effectively cope with the supplier’s yield uncertainty in the assembly system and it is expected to improve the competitiveness of the assembly system in practice.

Key words: yield uncertainty, VMI, commitment order quantity contract, replenishment, assembly system

CLC Number: