also examine VMI as a means of offering a single supplier and
retailer some operational flexibility. The supplier follows a fixed production schedule, but
can ship to the retailer in each or any period. They assume that VMI is initiated by a contract
which transfers decision rights to the supplier, but that supplier must maintain certain stock
levels at the retailer. Performance of traditional retailer-managed-inventory with information
sharing and VMI are compared. Through a periodic review inventory model, they show that
VMI is beneficial in most scenarios but not all, and that its effectiveness depends strongly on
the initiating contract.