An integrated inventory model for single vendor multi customer scenario with multiple shipments in a supply chain

Abstract

The present study focuses on determining the economic ordering quantity (EOQ) and shipping strategy of an inventory system that is integrated with a single-product, single-vendor and multi-customer scenario. Depending on the demand of all customers, production and shipping policies are determined and a suitable model is presented to illustrate the transfer of unequally-sized batches in a lot. Optimum values for the decision variables are determined using a direct search method. To justify the lot-splitting solution approach for the integrated inventory problem, an alternative model with no lot splitting is devised and tested under the same conditions which produced similar or better results. A numerical example and the related sensitivity analysis are presented to show the effectiveness of the proposed model.

Keywords:

• inventory
• multiple shipment
• economic order quantity
• vendor
• customer