Simulating effects of transportation disruption on supply chain based on Vendor Managed Inventory approach

As competitions between firms become fiercer, they are constantly finding new ways to win the competition. They employed various initiatives such as outsourced manufacturing and increased product variety for increasing profit and customer satisfaction. Another strategy employed is supply chain management. However, managing supply chain presents certain challenges. There are a lot of risks like demand changes, transportation disruptions and natural disasters which can threat the stability of chain members and increases vulnerability of the whole supply chain. Examples of this includes; terrorist attacks on the world trade center on September 11, 2001, the SARS epidemic in south-East Asia and the recent H1N1 epidemic which led to costly disruptions in supply chain. A review of literature reveals that identifying risks and managing supply chain disruptions are important issues in supply chain management. Another important issue highlighted by literature is impact of information sharing on supply chain performance. Vendor managed inventory is new approach to supply chain which provide good information sharing among the chain’s members. According to increscent of uncertainty which threats stability of supply chain and importance role of information sharing in today’s supply chain, this research provides an attempts to investigate impacts of transportation disruption on proposed Vendor Managed Inventory. Simulation modeling is utilized as a useful tool for evaluating system efficiency and inventory level.