An improvement of an integrated single-vendor single-buyer inventory model with shortage

Abstract

Wu and Ouyang (2003) discuss an integrated single-vendor single-buyer inventory system with shortage derived algebraically and present an algorithm to solve it. Because of an integer constraint for one of the three decision variables, their proof of a global cost minimum is incomplete. This note justifies the algorithm described in Wu and Ouyang (2003).

Keywords:

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

Acknowledgements

The author greatly appreciates the anonymous referees for their valuable and helpful suggestions regarding an earlier version of this paper.