Developing a new model for dynamic vendor managed inventory with considering time value of money

This paper investigates a new dynamic two‐echelon single‐vendor multiple‐buyer supply chain model under vendor managed inventory assumptions, which named dynamic vendor managed inventory, named DVMI, model. The DVMI model is formulated in order to find out the optimal sales quantity for each buyer at each period by maximising the profit of supply chain. All parameters are considered deterministic and delays in the payments are permissible. In addition, the relationship between sales quantity and sales price is assumed to be linearly. Implementation of proposed DVMI model is analysed with a case study that carried out at an Iranian dairy products company. The DVMI model is solved by using both LINGO and MATLAB genetic algorithm and direct search toolbox. Furthermore, sensitivity of model respect to the number of selected buyers in each period parameter is analysed.