Keeping Retailer's Cycle Service Level Under VMI Strategy -- A Regression Model

Open Access
Zhang, Yu
Graduate Program:
Industrial Engineering
Master of Science
Document Type:
Master Thesis
Date of Defense:
Committee Members:
  • Paul Griffin, Thesis Advisor
  • VMI
  • cycle service level
  • days of supply
  • regression
As a product or service moving from supplier to the customer, it needs to go through many intermediate links, for example distributor and wholesaler. Each partner in the supply chain has their own strategies, such as different cycle service level or lead time, which led to the distortion of demand information from downstream to upstream of the supply chain. This is the well-known bullwhip effect. An initiative called vendor-managed inventory (VMI) strategy appears to improve the efficiency of the supply chain. Its core idea is to share information between each levels of the supply chain, trying to reduce the variability of demand information. J&J is one of companies that earliest implement VMI and J&J is in charge of managing the inventories of many of its customers. One of its customers, Dollar General, is asking J&J to keep the cycle service level while at the same time reduce the stock level. In this article, we will analyze the inner connections between days of supply and cycle service level. We will use statistic method to analyze two years demand data of DG. Finally, we use a regression model to represent this relationship.