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Inventory Replenishment and Inbound Shipment Scheduling Under a Minimum Replenishment Policy

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  • Hark-Chin Hwang

    (Department of Industrial Engineering, Chosun University, Dong-Gu, Gwangju 501-759, South Korea)

Abstract

An effective supply system for a vendor-managed inventory (VMI) warehouse requires collaboration between a supplier and a customer, and coordination between production and distribution functions. We study a dynamic lot-sizing model for production and inbound transportation to the VMI warehouse under a policy, based on mutual benefit of the supplier and the customer, that each replenishment quantity should be no less than a predetermined minimum size. To take advantage of economies of scale in replenishment operations as well as in shipment consolidation operations, the problem in this study assumes a concave replenishment cost structure in general for which optimal algorithms are presented. By computational experiments, we show that the most important parameter on the system is the minimum replenishment quantity. We also show that the minimum replenishment policy is successful only when large-size demands are guaranteed based on collaborations.

Suggested Citation

  • Hark-Chin Hwang, 2009. "Inventory Replenishment and Inbound Shipment Scheduling Under a Minimum Replenishment Policy," Transportation Science, INFORMS, vol. 43(2), pages 244-264, May.
    • Handle: RePEc:inm:ortrsc:v:43:y:2009:i:2:p:244-264
    DOI: 10.1287/trsc.1080.0237
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    References listed on IDEAS

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    Cited by:

    1. Hark-Chin Hwang, 2010. "Economic Lot-Sizing for Integrated Production and Transportation," Operations Research, INFORMS, vol. 58(2), pages 428-444, April.
    2. Lee, Shine-Der & Fu, Yen-Chen, 2014. "Joint production and delivery lot sizing for a make-to-order producer–buyer supply chain with transportation cost," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 66(C), pages 23-35.
    3. Christine Nguyen & Alejandro Toriello & Maged Dessouky & James E. Moore, 2013. "Evaluation of Transportation Practices in the California Cut Flower Industry," Interfaces, INFORMS, vol. 43(2), pages 182-193, April.

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