Buyer-Vendor Integrated system – the Technique of EOQ Dependent Shipment Size to Achieve Steady Level and Cost Minimization

Abstract

Study of buyer-vendor integrated system, in general, has two major features; determining delivery schedule with supply quantity in each shipment and minimization of total incremental cost. Researchers in this area concentrate on latter part, which probably may not justify both the features. Many models developed so far, without considering both the features, begin with some pre-determined shipment pattern and establish cost minimization but may not establish stability in supply or shipment size that may vary in reality. In fact along with cost minimization stability in shipment size should also be a dominant feature of the doubly effective inventory model. Stable supply within a normal limit of small fluctuation will allow the carrying charges to be considered constant. The importance of the model lies in making all shipment size dependent on EOQ. The shipment size gets stable after two or three shipments and achieves optimization of total incremental cost.