This paper evaluates how a firm uses vendor managed inventory (VMI) to manage inventories under costs constraint in uncertainly industrial environment and various demand. The emphasis of this research is to discuss the impacts how demand variation influences the effects of the firm executing VMI and how different supplier levels (ABC) affects firm¡¦s VMI strategy. This research built a cost model which contained construction cost, overhead cost, inventory cost, and shortage cost and compared the profits ex-using VMI with the profits using VMI. Furthermore, use the same model to find out the most proper VMI decisions in different supplier levels¡¦ conditions. This paper obtained some conclusions. First, the firm using VMI under uncertain demand would take more advantages than under certain demand. Second, we can find the best VMI strategy of a firm.