Based on the VMI model with completely backlogging and without backlogging, the authors develop a new VMI model with partial backlogging and time-limited free back-orders, including a single vendor and multiple buyers. This model modifies the backlogging cost proposed by some documents, and takes account of the deterioration cost in the analysis of the total inventory cost. A numerical example and sensitivity analysis are presented to illustrate the model. The theoretical evidence is provided for VMI system to make management decision.