A multi-echelon integrated JIT inventory model using the time buffer and emergency borrowing policies to deal with random delivery lead times

Abstract

This paper proposes a multi-echelon integrated just-in-time (JIT) inventory model with random delivery lead times for a serial supply chain in which members exchange information to jointly make purchase, production, and delivery decisions. The performance of the whole supply chain depends on whether or not uncertain delivery can be handled properly. In this paper, a time buffer and emergency borrowing policies are used simultaneously to deal effectively with random delivery lead times and to protect a JIT system against shortages of goods. To construct easily the proposed multi-echelon integrated JIT inventory (MEIJITI) model, a duplication methodology is created. Since optimizing the proposed model is equivalent to solving an extremely complex mixed nonlinear integer programming problem, three propositions used to reduce the solution space and simplify the solution procedure are derived. Accordingly, a proposed search method for finding the optimal solution and a simulated annealing algorithm used successfully to obtain a near-optimal solution are developed. Two phases of an experiment were conducted, and some important observations are drawn.