Design of a Vendor Managed Inventory Model for Impulse Purchase Products in a Two-level Supply Chain

Although there are multiple methodologies to carry out collaborative practices of inventory management, none are set up for impulse purchase products. This is a disadvantage because with the opening of new markets and the proliferation of consumer culture, the economic importance of buying products on impulse always remains relevant. In this paper, a Vendor Managed Inventory model was designed based on the direct participation of a vendor and a buyer (two-level supply chain), in order to agree on the procurement operations of a portfolio of impulse purchase products. For this proposal, a mathematical model based on classical optimization was designed to minimize inventory costs. Subsequently, a case study was conducted comparing the economic impact of the model with respect to a traditional supply agreement in a non-cooperative scenario. The results reflected positive economic effects in the implementation of the model related to the economies of scale to exploit fixed costs present in the agreement. Additionally, the conditions under which the implementation of this model grants individual and global benefits to the participating companies were validated. © 2020. Jordan Journal of Mechanical and Industrial Engineering. All rights reserved.