A SINGLE-VENDOR MULTI-BUYERS INTEGRATED INVENTORY POLICY FOR A DETERIORATING ITEM

ABSTRACT

Since optimal inventory policy decision by individual player may not result in global optimum, modern enterprise seeks to decrease the total system cost by strategic alliances between the vendor and buyer. This study develops a single-vendor, multi-buyers inventory policy of a deteriorating item with a constant demand rate. A mathematical model considering the view of both the vendor and the buyer is developed. It can be shown that the integrated policy results in an impressive cost-reduction compared with an independent decision by the buyer.

Keywords:

• integrated approach
• single-vendor-multi-buyer
• deterioration