A geometric programming approach for a vendor managed inventory of a multiretailer multi-item EPQ model

Abstract

Due to the uncertain situations of the world, considering inventory management in a stochastic environment gains a lot of interest. In this paper, we propose a multi-item economic production quantity (EPQ) model with a shortage for a single-vendor, multi-retailer supply chain under vendor managed inventory (VMI) policy in a stochastic environment. Three stochastic constraints are developed in the model. Geometric programming (GP) approach is employed to find the optimal solution of the nonlinear stochastic programming problem to minimize the mean-variance of the total inventory cost of the system. Since the problem is in the Signomial form, first, an algorithm is used to convert the model into the standard GP form. The performance of the addressed model and the solving method are evaluated based on computational experiments and sensitivity analysis. A case study in an Iranian furniture supply chain is conducted to show the applicability of the proposed model and 17.78% improvement in terms of total cost is gained.