Effects of Yield and Lead-Time Uncertainty on Retailer-Managed and Vendor-Managed Inventory Management

Soonkyo Lee, Young Joo Kim, Taesu Cheong, Seung Ho Yoo

Research output: Contribution to journalArticlepeer-review

8 Citations (Scopus)


Generally, there are various elements of uncertainty in a supply chain. In particular, uncertainties in lead time, demand, and yield are very important in the semiconductor industry. Higher uncertainty can lead to bullwhip effects that can undermine the performance of the entire supply chain. This study examines the relationship between uncertainty in the supply chain and the outcome of inventory replenishment policies. Specifically, we analyze the effects of well-known uncertainties on manufacturer production quantity and retailer order quantity decisions in a decentralized supply chain. In addition, we also analyze and compare the effects of these uncertainties for the retailer-managed inventory and the vendor-managed inventory policies. Using numerical experiments, a comparative analysis of the two alternatives is conducted to determine suitable options for improving supply chain performance. In general, the performance of vendor-managed inventory is better than that of retailer-managed inventory, but we observe from the numerical experiments that there exist circumstances under which retailer-managed inventory shows better supply chain performance.

Original languageEnglish
Article number8922591
Pages (from-to)176051-176064
Number of pages14
JournalIEEE Access
Publication statusPublished - 2019

Bibliographical note

Funding Information:
This work was supported in part by the Korea Institute for Advancement of Technology (KIAT) grant funded by the Korea Government (MOTIE) (The Competency Development Program for Industry Specialist) under Grant P0008691, and in part by the Research and Development Program of the Korea Railroad Research Institute.

Publisher Copyright:
© 2013 IEEE.


  • Yield
  • decentralized supply chain
  • lead-time
  • optimal order quantity
  • optimal production quantity
  • retailer-managed inventory
  • single-period inventory
  • vendor-managed inventory

ASJC Scopus subject areas

  • Computer Science(all)
  • Materials Science(all)
  • Engineering(all)


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