Date of Award


Degree Name

Doctor of Philosophy


Industrial and Manufacturing Engineering

First Advisor

Dr. David M. Lyth


In recent years, practitioners and academic researchers have emphasized that organizations need to collaborate with suppliers and customers to improve their competitive advantage. The availability of cost efficient information technologies like EDI, XML, etc. have made it possible to develop and implement many forms of collaboration strategies. Among them, Vendor Managed Inventory (VMI) and Collaborative Planning, Forecasting and Replenishment (CPFR) are most popular, which are considered for this study. While many studies have identified the benefits of demand information sharing in supply chains; however the benefits gained by implementing collaboration strategies like VMI and CPFR in a variable demand environment are not well established in the literature.

This study uses discrete event simulation (Arena software) to develop three different supply chain simulation models (TSC, VMI and CPFR). These models are used to investigate cost benefits of CPFR and VMI over Traditional Supply Chain (TSC) in a variable demand environment. The conceptual model is a two echelon production-inventory system with a manufacturer (plant and warehouse) and a retailer. Periodic review order up-to inventory policy is used to determine order quantity for retailer and production quantity for manufacturer during each period. Manufacturer has capacity constraints and any demand not met during the period is backordered. Similarly, retailer fulfills their demand from available inventory and any demand not met is backordered. Demand variability, production capacity, backorder penalty cost, delivery lead time and supply chain strategy are used as the control variables. Manufacturer cost and retailer cost are used as the performance measures.

The outputs from the three simulation models are analyzed using ANOVA and the Pairwise Comparisons method. The results from this study confirm that when compared to TSC, both VMI and CPFR achieve cost reduction for both the manufacturer and the retailer. Also higher cost reduction is achieved in CPFR collaboration strategy compared to VMI for both the manufacturer and the retailer. In addition for both the manufacturer and the retailer, higher cost reductions are achieved in the CPFR strategy when demand variability is high, production capacity is low, backorder penalty cost is high and delivery lead time is high.

Access Setting

Dissertation-Open Access