Application of the Vendor Managed Inventory (VMI) Model Based on Total Distribution Cost Optimization

Giovano Alberto (Pusat Studi Rantai Pasok, Universitas Katolik Parahyangan, Indonesia)
Alexander Jimmy (Pusat Studi Rantai Pasok, Universitas Katolik Parahyangan, Indonesia)

Maritime Park: Journal Of Maritime Technology and Socienty
Volume 5, Issue 2, 2026

This study develops an optimization-based Vendor-Managed Inventory (VMI) model to improve coordination between inventory and transportation decisions in an upstream automotive distribution network in West Java. The problem is formulated as a multi-period Inventory Routing Problem (IRP) and solved using AMPL with CPLEX. The model minimizes total logistics cost, including transportation and inventory holding costs. A benchmark comparison with the company’s existing decentralized replenishment policy is conducted. Results show that the proposed VMI model reduces total monthly logistics cost by 10.66%, from IDR 2.74 billion to IDR 2.44 billion. In addition, service performance improves significantly, with demand fulfilment increasing from 91.3% to 99.2% and stock-out occurrences eliminated. The findings highlight the importance of integrated decision-making in freight distribution systems and provide practical insights for transport capacity planning and inventory positioning.