Multi-vendor integrated procurement-production system under shared transportation and just-in-time delivery system

Document Type

Article

Publication Date

1-1-2010

Abstract

Just-in-time (JIT) procurement is one of the important elements of lean production system. Successful implementation of JIT needs vendor-manufacturer cooperation on small lot size delivery and inbound logistics cost reduction. Unlike the most recent literature focusing on single-vendor and single-buyer integrated inventory systems, this paper studies a multi-vendor integrated procurement-production inventory system that incorporates delivery and shared transportation costs. A multi-vendor optimal model is developed here for deciding the batch size of vendor's production, and delivery frequencies of different vendors to the manufacturer. Solution procedures for two special casesuncapacitated and capacitated models are developed; especially, a new approximate method for capacitated model is devised. Numerical examples demonstrate the solution mechanism for the model. The results highlight cooperation between vendors and manufacturers on JIT procurement practices. © 2010 Operational Research Society Ltd.

Publication Source (Journal or Book title)

Journal of the Operational Research Society

First Page

1654

Last Page

1666

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