Comparison analysis of vendor managed inventory with consideration of transportation and inventory costs

In this paper we built up a one supplier-two retailers supply chain cost-computing model, with parameters of costs in transportation, uploading & loading, ordering cost per time for retailer, demanding rate of retailer and yearly storage costs of supplier and retailer. Through computing and analyzing of a practical example, the results show: 1) In the condition of considering transportation fee and ignoring this fee, the whole cost of supply chain system reduces respectively 32.1% and 27.2% after the implementation of WMI. 2) When supplier and retailer one implement VMI, the cost of system declines 20.7% and 17.2%. 3) When supplier and retailer two implement VWI, the cost of system declines 21.9% and 18.3%.