Multi-objective optimization for VMI operations in the LCD supply chain

This paper evaluates the performance of a VMI hub which supplies bare glasses to LCD manufacturers. We construct a simulation model to describe the operations of a third-party logistics provider that imports, stores, and delivers glass panels on behalf of an international supplier. Ordering and inventory decisions will affect service level and operating cost of the 3PL. Under the new VMI proposal, the 3PL can access inventory information of all parties and is responsible for making all decisions. To evaluate the efficiency of the VMI proposal, we develop an MOPSO algorithm combining with the simulation model to identify non-dominated solutions that constitute the trade-off curve between fill rate and total inventory. The experiments suggest that the VMI hub dominates existing operations if downstream customers require a very high service level. The second set of experiment indicates that implementing a VMI hub will provide significant advantage if the delivery time from the supplier to the hub is substantially larger than the delivery time from the hub to local manufacturers.