System Dynamic Modeling to Improve Complex Vendor Managed Inventory

Abstract

This abstract presents a summary of the study that discusses the implementation of Vendor Managed Inventory (VMI) as an effort to improve inventory system performance within the supply chain. The background of this research is based on problems related to demand and inventory information imbalance, which often lead to the bullwhip effect, high inventory costs, and low service levels. This study aims to analyze the impact of VMI policy implementation on inventory performance and overall supply chain stability. The research methodology employs a System Dynamics approach to model the interactions among demand, inventory policies, supplier capacity, and service levels. The developed model is used to simulate several VMI policy scenarios and compare them with conventional inventory systems. The data used in this study are obtained from a company case study and supported by relevant literature. The results indicate that the implementation of VMI is able to reduce inventory variability, mitigate the bullwhip effect, and improve customer service levels. In addition, the VMI system enhances coordination between suppliers and customers, resulting in a more stable and efficient supply chain performance. This study is expected to serve as a reference for companies in designing integrated and collaborative inventory management policies.