Single supplier single retailer inventory model controlled by the reorder and shipping points with sharing information

Abstract

This study investigated the integrated stochastic inventory problem for a two-stage supply chain consisting of a single retailer and a single supplier. By using batch shipment policy, the expected total cost can be significantly reduced. An equally sized batch shipment model, controlled by both the reorder and shipping points, with sharing information by enterprise resource planning and radio frequency identification is constructed. The problem is solved optimally by the proposed algorithm that determines the economic lot size, the optimal batch sizes and number of batches. A numerical example is included to illustrate the algorithmic procedures and to prove that the model controlled both by the reorder and shipping points is superior to the classic model controlled only by the reorder point.

Keywords:

• shipping point
• sharing information
• inventory
• stochastic demand