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Cooperative inventory model for vendor-buyer system with quantity and freight discounts

Author

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  • Wakhid Ahmad Jauhari
  • Kartika Winingsih

Abstract

In this paper, a single-vendor single-buyer integrated inventory model with stochastic demand and quantity and freight discounts is developed. Here, we consider a situation where vendor and shipper offer discounts to buyer. We propose four integrated inventory models by employing four discount schedules that is dual all-unit discount, dual incremental discount and two mixed discounts. An iterative procedure is proposed to find shipment size, safety factor, production batch and discount on proposed models. A numerical example is provided to show the benefit of using the models. The behaviour of the models affected by the changes of demand uncertainty, discounts and number of discount levels are also analysed.

Suggested Citation

  • Wakhid Ahmad Jauhari & Kartika Winingsih, 2016. "Cooperative inventory model for vendor-buyer system with quantity and freight discounts," International Journal of Services and Operations Management, Inderscience Enterprises Ltd, vol. 25(4), pages 508-530.
    • Handle: RePEc:ids:ijsoma:v:25:y:2016:i:4:p:508-530
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