An integrated single-vendor single-buyer inventory system with shortage derived algebraically

Abstract

In previous modellings of the integrated vendor–buyer system for the shortage is the not-allowed case, a new approach to find the buyer's economic order quantity (EOQ ) and the vendor's optimal number of deliveries, using some slight algebraic developments, appeared. This paper extends the mentioned algebraic approach to the integrated vendor–buyer system for the shortage case. The theoretical result obtained here reveals that the integrated total cost with shortage is lower than the integrated total cost without shortage.

Keywords:

• integrated inventory system
• single-vendor single-buyer
• shortage

Acknowledgements

The authors greatly appreciate the anonymous referees for their valuable and helpful suggestions regarding earlier version of the paper.

LIANG-YUH OUYANG is a Professor in the Department of Management Sciences at Tamkang University in Taiwan. He earned his PhD from the Graduate Institute of Management Sciences at Tamkang University. His research interests are in the field of production/inventory control, probability and statistics. He has publications in the Journal of the Operational Research Society, Computers and Operations Research, European Journal of Operational Research, Computers and Industrial Engineering, International Journal of Production Economics, IEEE Transactions on Reliability, Sankhā, Metrika, Production Planning & Control, Journal of the Operations Research Society of Japan, opsEARCH, Journal of Statistics & Management Systems, Journal of Interdisciplinary Mathematics, lnternational Journal of Information and Management Sciences. International Journal of Systems Science, Yugoslav Journal of Operations Research, The Engineering Economist, International Journal of Information and Optimization Sciences, Mathematical and Computer Modeling and Applied Mathematical Modelling.

KUN-SHAN WU is an Associate Professor in the Department of Business Administration at Tamkang University in Taiwan. He earned his PhD from the Graduate Institute of Management Sciences at Tamkang University in Taiwan. His research interests are in the field of production/inventory control, probability and statistics. He has published articles in Computers & Industrial Engineering, Computers & Operations Research, International Journal of Information and Management Sciences, International Journal of Information and Optimization Sciences, International Journal of Production Economics, International Journal of Systems Sciences, Journal of Interdisciplinary Mathematics, Journal of Statistics & Management Systems, Journal of the Operational Research Society, opsEARCH, Proceedings of the National Science Council (Part A) – Republic of China, Production Planning & Control, Quality & Quantity, Tamsui Oxford Journal of Mathematical Sciencesand Yugoslav Journal of Operations Research.