If it was for me, Vlahovic would spend the whole season on the bench, and he would play for the last 30", that's it. This is the year that leads to the World Cup, he refused to renew the contract, his performances are atrocious and yet he believes he deserves 12 millions per year. Juventus bought him for a lot of money, believed in him, help him, and this is what the team gets in exchange. Keeping him on the bench for the whole season would send a very strong message to everybody.
He deserves it. He would also deserve to be sent to the stands and not be with the team at all because he is aiming to let his contract expire so he can become a free agent. That gives him and his agent more freedom to negotiate a new contract next season.
However, it's a very expensive punishment for the club. They invested a lot of money in him. His salary isn't just the biggest in the club. It's the highest in the league by far. I doubt they would be able to bring in a quality second striker to replace him if Vlahovic is still around. If they sell him now for €20-30 million, and I doubt they would be able to get more for him, the club is looking at a significant capital loss. He was purchased from Fiorentina for €80 million. This difference must be recovered with other sales that record capital gains, which is also a reason why the club frequently sells their young talents for silly fees like we saw with Huijsen a few seasons ago.