Vendor Managed Inventory on Two Echelon Inventory System with Optimum Accelerated Lead Time and Component Commonality

We proposes a model to manage VMI supply chain which has multi items product with certain commonality degree where it facilitates buyer to control the lead time. We present a solution technique to solve VMI supply chain problems by comparing lead time as a parameter and lead time as a decision variable that is possible to be accelerated. Before lead time acceleration is considered, the optimal solutions are obtained simultaneously. On the other sides, we have developed an algorithm for finding solutions when lead time acceleration is allowed. This proposed model is suitable for an organization which implements continuous review on its inventory policy. It can be implemented when the market is monopolistic because back-ordered is allowed and buyer is willing to delay demand fulfilment in order to reduce holding cost.