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Hi Sir, hope you are doing well! I am currently in the process of preparing a proposal for VMI for one of my customers mainly for wear parts. While calculating the pricing of the wear parts apart from my standard manufacturing and other fixed cost component, I need to add inventory carrying cost also for one year (space to be provided by customer). Also, in order to maintain the safety stock all time which is an investment for us, should we include that also in our pricing? Also in order to make the  VMI proposal attractive, how to justify the customer of the increased VMI price apart from zero lead time advantage? Customers counter logic might be proactive procurement to minimize the lead time and not willing to pay a higher price.

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