Integrated inventory model with lot size, production rate and lead time interactions

Abstract

Under the assumption that the replenishment lead time is dependent on both lot size of the buyer and production rate of the vendor, an integrated production inventory model is presented in this paper. The decision-making interaction of lead time between a buyer and a vendor in the integrated inventory model is analyzed. In terms of the model, a solution procedure has been developed to obtain the efficient ordering strategy for a manufacturing company. The numerical examples are employed to validate the solution procedure. Specifically, from the results of numerical examples, it can be shown that, the significant savings can be achieved for the supply chain through joint decision with lot size, production rate and lead time interactions.

Keywords:

• integrated inventory model
• controllable production rate
• lead time reduction
• interactions