This paper considers a two-level vendor managed inventory (VMI) system comprising a distribution center (DC) and a retailer. Both the DC's and the retailer's replenishment decisions follow the order-up-to-level policy and aim at maximizing the profit of the overall system. We critically examine the potential of the DC's ability to modify delivery decisions, identify and quantify the cost factors that influence the DC's modification ability, establish a relationship between the DC's location and its modification ability, and show the trade-off between the DC's modification ability and related costs. Our analysis provides a new insight into the role of the DC and reveals the full potential of the VMI system. Our findings and their practical implications, demonstrated