An extended vendor-buyer integrated inventory model and its minimal cost solution technique (Q2655887)

Summary: This paper extends a single-vendor single-buyer integrated inventory model under controllable lead time with extra safety stock. Recently, a model based on equal and/or unequal sized batch (sub-lot) shipments subject to the constraint of meeting the demand in the lead-time fully was developed. Then a heuristic solution procedure of the model was proposed and cost reductions for two numerical problems were shown. To make the model more realistic, we extend it by restricting the capacities of the transport equipment and buyer's storage; considering the set up time of the vendor and transportation times of batches and amending several constraints. Then a number of properties that lead to the minimal cost solution to the model are established and the solution method is illustrated with a numerical problem. A comparative study of the methods on some numerical problems is carried out to validate the optimality of the present method.