Abstract: A joint optimization of production-inventory of a cross-border supply chain system based on VMI supply mode is studied. The difference between VMI supply mode and traditional supply mode is compared with two transportation modes—ocean shipping and air shipping and their impacts on the decision. The results show that for the case company, adopting VMI as inventory control strategy as cross-border supply chain inventory control method has economic advantage compared with the traditional method and especially when adopting ocean shipping method, the total cost is lowest. In the meanwhile, an analysis is conducted on some important model parameters, such as capital cost, inventory holding cost and shortage cost, and their impacts on the decision discussed. Implications for practice have been summarized based on the results. The conclusions have reference values for other companies who want to improve their cross-border supply chain inventory.

Key words: cross-border VMI, production-inventory optimization, transportation, uncertainty