Modelling on vendor-managed inventory policies with equal and unequal shipments under GHG emission-trading scheme

Abstract

This paper studies five different stock control policies in the supply chain management. The lead time can be shortened by extra investment between two entities. The vendor produces a single product and delivers the order quantity in a number of unequal shipments to the buyer. The unit holding cost is divided into financial and storage components. The vendor takes care of financial component until the products are sold to the end customers to encourage them to buy more products. In order to reduce emissions from production and to protect the environment, some legislative actions have been taken such as implementing taxes and penalties. The cost function also includes these taxes and penalties. The optimal solutions of this constrained mixed integer non-linear programming problem are obtained by using the Genetic Algorithm (GA). Numerical examples are employed and comparison works are carried out with other existing literatures. Results show that the performance of the system is better when it is operated under unequal shipment policies and vendor-managed inventory (VMI) agreement.

Keywords:

• buyer's space limitation
• genetic algorithm
• geometric shipment policy
• inventory control
• vendor-managed inventory

Disclosure statement

No potential conflict of interest was reported by the authors.

Additional information

Funding

The work of the authors are supported by Science and Engineering Research Board (SERB), Government of India, New Delhi, under the grant number DST-SERB/SR/S4/MS: 814/13-Dated 24.04.2014.