Bi-level programming model for inventory control of deteriorating items based on VMI

In this paper we established an inventory control model for deteriorating items under the circumstances of vendor-managed inventory. With the assumption that vendor integrates the small amount of order quantities from downstream enterprises into a large quantity so as to minimize relevant costs, we studied a quantity-based integrated dispatching and inventory policy for the vendor. Then, a Bi-level programming model is proposed and a Genetic Algorithm is designed to solve the model. At last, a numerical example is used to verify the effectiveness and feasibility of the model.