The Development of the Order Allocation Model based on the Reliability of Retailers

One of the novel approaches in supply chain management is Vendor-managed inventory (VMI). The aim of this policy is to establish a long-term relationship between retailers and vendors. The prerequisite for the long-term relationship of vendors with retailers is to select retailers who can meet the most criteria from the vendors' perspective and have a considerable level of reliability. In this paper, a two-tier supply chain with multiple retailers and multiple vendors has been developed using a combination of multi-criteria decision-making methods and multi-objective programming under the VMI policy. The developed model is such that, in order to establish long-term relationships and reduce supply chain costs, each retailer can only participate with one vendor. In general, the aim of the present study is to minimize costs, increase the reliability of retailers, and select retailers who have relative prominence compared to other retailers. To this end, a            hierarchical analysis process (AHP) has been performed for each vendor, and the weights of retailers relative to the suppliers have been calculated. Then, the obtained weights were input into the three-objective model designed. The proposed model, considering a combination of qualitative and quantitative criteria in selecting retailers under VMI, can find a combination of the best      retailers by balancing between the criteria. In order to maintain the long-term relationship of the vendor with the retailers, it is better for the vendor to consider important criteria that are  necessary in selecting retailers.