Single-vendor multi-buyer integrated inventory system for multi-item

Abstract

In this paper, a single-vendor multi-buyer supply chain system is considered in which several products. The demand of this supply chain for each product is a stochastic variable and it is assumed to follow a normal distribution. The lead time of receiving products from vendor to buyer is a variable which controllable by the adding extra cost. During the consumption period, the shortages are allowed and they are completely backlogged in the next replenishment. The production process is assumed to be imperfect, i.e., all the finished products need not consumable, so the buyer implements a screening process to separate the defective and non-defective items and the vendor pay warranty cost for each defective item to the buyer. We investigated the economic order quantity (EOQ), lead time and number of shipments such that total cost of the supply chain have been minimised. At last numerical illustration and sensitivity analysis are given.