A near optimal solution for integrated production inventory supplier-buyer deteriorating model considering JIT delivery batch

Abstract

The present study develops a just-in-time (JIT) single-buyer single-supplier integrated deteriorating model with multiple deliveries considering the costs and benefits of implementing JIT delivery. Distinct from the former concept of average inventory level, our paper proposes a different approach to deal with the first production batch and uses an alternative method to approximate the relationship between the supplier's production time and the storage time. Moreover, our model develops analytical equations and proposes an algorithm to derive a near optimal solution for the integrated production inventory deteriorating model. A numerical example is also presented. The result shows that the supplier's set-up cost, the buyer's ordering cost and the transportation cost are three of the critical factors affecting the integrated deteriorating inventory model.