Single vendor-buyer integrated inventory system for imperfect production with variable lead time

Abstract

In this paper, the authors considered the single vendor single buyer integrated production inventory problem with stochastic demand for an imperfect production process. They relax the assumption that, the lead time is varying linearly with the lot size. That is, the lead time is composed of a lot size dependent run time and constant delay times such as moving, waiting and setup times. A solution procedure is mentioned for solving the proposed model and numerical examples are used to illustrate the benefit of integration. A sensitivity analysis is also performed to explore the effect of key parameter D (demand). A simple procedure is suggested to obtain an approximate solution of the proposed model. Examples are used toillustrate the model and explore the effect of important parameters on the production schedule and total expected cost.