Incorporating Transportation Cost into Joint Economic Lot Size For Single Vendor-Buyer

Abstract

Considerable attention to coordinate the system between buyer and vendor has become an interesting issue to efficiently increase the performance of supply chain activities. Joint economic lot size model (JELS) has been introduced by many researchers as the spirit of coordinating the flow of material from the vendor to its downstream. As an inventory replenishment technique, JELS model is centered on reducing joint total cost of vendor and buyer by simultaneously deciding optimal delivery lot size, number of deliveries, and batch production lot. It is appropriate to take into account transportation costs as the function shipping weight and distance since delivery lot size has interrelated with shipping weight. Hence, this study constitutes an effort to develop the model of JELS by incorporating transportation cost. The solution procedure of the model is developed for solving two problems which are incapacitated and capacitated model. In addition, numerical examples were provided to illustrate the feasibility of the solution procedure in deriving optimal solution. The result presents central decision making which is useful for coordination and collaboration between vendor and buyer.

Integrated inventory system with freight costs and two types of quantity discounts

“…The verification for the proposed models In order to test our proposed algorithm is the same algorithm withLeuveano et al's (2014b) algorithm and Jauhari et al's (2016) algorithm, we assume freight cost is zero and buyer's purchasing cost is equal to $225/unit. The verification for our proposed model withLeuveano et al (2014b) andJauhari et al (…”

“…Ballou (1991) argued that time, effort, and cost considerations often dictate that logistics decisions. Nie et al (2006), Ertogral et al (2007), and Leuveano et al (2014aLeuveano et al ( , 2014b presented an integrated inventory model with incorporating transportation cost, however their model did not incorporate stochastic demand. Gurtu et al (2015) modified EOQ models to include transport cost and emission cost.…”

“…In this section, we proposed two algorithms to minimise the integrated total cost. The proposed algorithms are modified from the basic algorithm by Leuveano et al (2014b) and Jauhari et al (2016). The algorithms are presented as follows:…”

“…The numerical example here includes actual freight rate schedule and parameter data. To illustrate the above solution procedure, the parameter data (Table 2) is adopted from Leuveano et al (2014b). The quantity schedule from supplier is shown in Table 3.…”

Integrated Vendor–Buyer Lot-Sizing Model with Transportation and Quality Improvement Consideration under Just-in-Time Problem

“…Leuveano et al [24] incorporated transportation as the function of shipping weight and distance into an integrated model. However, the transportation function only deals with LTL shipments.…”