An integrated vendor‐buyer inventory model with partial backordering
Journal of Manufacturing Technology Management
ISSN: 1741-038X
Article publication date: 7 September 2012
Abstract
Purpose
The purpose of this paper is to analyze the effects of supply chain coordination on inventory management while the retailer inventory cycle consists of a shortage period and the backorder rate linearly decreases as a function of shortage duration. It is intended to consider how on‐hand inventory and shortage durations are altered when the decisions are centralized.
Design/methodology/approach
Mathematical modelling of inventory costs for the retailer and the vendor is used to formulate objective functions. The vendor sets his inventory period as an integer multiple (n) of the retailer inventory cycle in which the integer multiple is a decision variable. Solution spaces of models are analyzed to determine two other decision variables including, on‐hand inventory duration and shortage length.
Findings
The integrated model consists of a unique pseudo convex area when (n) is fixed and as a result, there is a unique minimum point. Based on numerical examples and sensitivity analysis, in most situations coordinated inventory management reduces total costs of the supply chain and cost reduction rate increase at larger production rates.
Originality/value
This paper is a combination between production‐inventory models in two‐stage supply chains and partial backordering, which has appeared in single inventory models. To the best of the authors' knowledge, no mathematical model has yet been proposed. Moreover, the benefits of synchronization are analyzed through numerical examples.
Keywords
Citation
Moshrefi, F. and Reza Akbari Jokar, M. (2012), "An integrated vendor‐buyer inventory model with partial backordering", Journal of Manufacturing Technology Management, Vol. 23 No. 7, pp. 869-884. https://doi.org/10.1108/17410381211267709
Publisher
:Emerald Group Publishing Limited
Copyright © 2012, Emerald Group Publishing Limited