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An integrated equal-lots policy for shipping a vendor's final production batch to a single buyer under linearly decreasing demand

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  • Omar, Mohd

Abstract

This paper considers a supply chain in which a vendor supplies a product to a buyer. The vendor is about to manufacture the final batch of the product at a finite rate and then periodically ship the output to the buyer. The buyer then consumes the product at a linearly decreasing demand rate. Most previous work on this topic has been based on the assumption of fixed demand rate. Costs are attached to the manufacturing batch set-up, the delivery of a shipment, and stockholding at the vendor and buyer. The objective is to determine the number of shipments and sizes of those shipments which minimise the total cost--assuming the vendor and buyer collaborate and find a way of sharing the consequent benefits. We show how the optimal policy may be derived when the shipments size are identical. We illustrate this policy with numerical examples.

Suggested Citation

  • Omar, Mohd, 2009. "An integrated equal-lots policy for shipping a vendor's final production batch to a single buyer under linearly decreasing demand," International Journal of Production Economics, Elsevier, vol. 118(1), pages 185-188, March.
    • Handle: RePEc:eee:proeco:v:118:y:2009:i:1:p:185-188
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    References listed on IDEAS

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    1. Lu, Lu, 1995. "A one-vendor multi-buyer integrated inventory model," European Journal of Operational Research, Elsevier, vol. 81(2), pages 312-323, March.
    2. Goyal, S. K. & Giri, B. C., 2003. "A simple rule for determining replenishment intervals of an inventory item with linear decreasing demand rate," International Journal of Production Economics, Elsevier, vol. 83(2), pages 139-142, February.
    3. Goyal, S. K., 1995. "A one-vendor multi-buyer integrated inventory model: A comment," European Journal of Operational Research, Elsevier, vol. 82(1), pages 209-210, April.
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    Cited by:

    1. Wee, Hui Ming & Widyadana, Gede Agus, 2013. "Single-vendor single-buyer inventory model with discrete delivery order, random machine unavailability time and lost sales," International Journal of Production Economics, Elsevier, vol. 143(2), pages 574-579.
    2. Huang, Chao-Kuei & Tsai, Deng-Maw & Wu, Ji-Cheng & Chung, Kun-Jen, 2010. "An optimal integrated vendor-buyer inventory policy under conditions of order-processing time reduction and permissible delay in payments," International Journal of Production Economics, Elsevier, vol. 128(1), pages 445-451, November.

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