Abstract: This paper focuses on stock replenishment and shipment scheduling with deteriorating item for vendor-managed inventory systems. Under the assumption that demand process follows a typical Poisson process,hybrid replenishment and dispatching model for VMI is proposed. From this model,one of the best hybrid policies,under which the long-run average cost is minimized,can be obtained easily by solving a simple programming problem. However,solutions obtained from the model are unnecessarily the exactly optimal but near-optimal,approximation of expected dispatching number within a replenishment cycle is involved. Anyway,a numerical example and simulation show that the disparity between results through optimization and simulation is tiny or even negligible,which demonstrates the validity of the model.

Key words: vendor-managed inventory (VMI), deteriorating item, replenishment and dispatching policy shipment consolidation, Poisson process, simulation