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Modeling Study on the Implementation of the VMI in a Two-Echelon Supply Chain

This paper studies the comparison of the profit generated among supply chain before and after the VMI model being implemented and the logistics costs lying in the enterprise supply chain system and the relevant linkages by setting up a two-echelon supply chain model based on the EOQ (Economic Order Quantity) model under which the logistics costs are subdivided. In the paper, two functions are also set up, corporate profit function and logistics cost function, analyzing through which the improved performance of VMI implementation can be realized when the logistics costs decline. Thereby, the approach to raise the logistics management efficiency can be put forward through standardization corporate logistics activities.