An EOQ model for a deteriorating item under permissible delay in a vendor managed inventory system

The vendor managed inventory (VMI) plays a significant role in inventory as well as supply chain management. In a VMI system, the supplier is responsible for the decisions related to the timing and replenishment quantity. This paper develops an inventory model for a deteriorating item with permissible delay under a vendor managed inventory system. Shortages are allowed and these are partially backlogged waiting up to arrival of the next lot. Demand is dependent on selling price as well as frequency of advertisement. Also, a numerical example is solved and a sensitivity analysis is included. It is found that the implementation of the VMI is more beneficial because is less costly compared with an inventory model without VMI.