Vendor managed inventory (VMI) as a supply chain coordination mechanism has been gaining a lot of attention. This paper develops analytical models for various approaches through which a single vendor-multiple retailer system may be coordinated through VMI. Through detailed analysis of the parameters involved, we discuss the conditions under which each of these approaches may be preferred. We also highlight the savings that can be derived in the transportation cost in a VMI setting. Different ways of structuring the replenishment policy under VMI have been considered.Models have been developed to exploit different cost trade-offs in the supply chain.Significant cost reduction is possible across different policies.Implications of adopting different models have been analyzed.