The recent articles of Disney and Towill (2003b, c) discussed the impact of vendor-managed inventory (VMI) system on the bullwhip effect.
Their analysis showed that, by implementing the VMI supply chain, both rationing and shortage gaming effect and order batching effect might be completely eliminated.
The use of VMI system also reduced the impact of price variations or the promotion effect on the bullwhip effect in the supply chain.
Finally, demand signaling processing effect exhibited much less variation in VMI supply chain than in a traditional supply chain, although a traditional supply chain can be designed to reduce the demand signaling processing effect at the expense of stockholding costs.
Through these recent studies, they emphasized that VMI system provides a significant opportunity to reduce the
demand amplification in real-world supply chains.