Decentralized VMI systems underperform centralized ones, contracts are crucial.
The article uses a type of game theory called Stackelberg game to study how a vendor and multiple retailers can work together in a supply chain. The leader in this game has more power than the followers. The researchers found that a centralized system where the vendor has more control performs better than a decentralized system. This means that having clear contracts between the vendor and retailers is important for a successful supply chain.