Abstract
In this paper, we consider an integrated production-delivery model in which a vendor supplies the same product to multiple buyers. Unlike existing study, in this proposed model, we assume that the sum of all buyers’ demand rates is larger than the vendor’s production rate under normal work, but less than that under overtime. All buyers are independent of each other. For each buyer, the lead time demand is stochastic and the shortage during lead time is permitted. The main objective of this model is to determine the optimal production and delivery policies and the optimal overtime strategy, which minimize the joint expected annual cost of the system. Based on the genetic algorithm, we develop a solution procedure to find the optimal production, delivery, and overtime decision of this model. Computational experiments show the error rate between the objective values obtained by the proposed solution procedure and the solutions solved by the exhaustive method. The results indicate that the proposed mixed genetic algorithm is more effective and adoptable in comparison with the exhaustive method as it can be able to calculate the optimal solutions for at least 96% for the instances. Ultimately, an adequate numerical example is given to show the detailed process of the solution procedure, and sensitivity analysis of main parameters with managerial implication is discussed.
Highlights
In the traditional supply chain system, management decisions for both the vendor and the buyer are independent of each other according to the classical economic production quantity (EPQ) or economic order quantity (EOQ) model
We consider an integrated production-delivery model by considering that the vendor manufactures the same product for N buyers in each production lot. e vendor manufactures the product with a limited production rate, and the production rate under normal work is less than the demand rate of all buyers, i.e., P < Ni 1Di
We consider an integrated production-delivery model in which a vendor supplies the same product to multiple buyers
Summary
In the traditional supply chain system, management decisions for both the vendor and the buyer are independent of each other according to the classical economic production quantity (EPQ) or economic order quantity (EOQ) model. Lin [28] took controllable lead time into the integrated vendor-buyer inventory model to obtain the optimal production and shipment decisions by minimizing the joint expected total annual cost. Based on the model of Shu et al [38], Zhang and Sun [12] took overtime into the single-vendor single-buyer integrated productiondelivery model under the vendor’s limited production capacity In their model, the vendor reserves a time interval to repair and maintain equipment and the transportation cost cannot be neglected. E objective of the integrated model is to find the optimal delivery quantity, the length of overtime, reorder point, and lead time, which minimize the joint expected total cost of this two-stage supply chain system. 3. Notations and Assumptions e following notations are used to develop a single-vendor multibuyer integrated model with limited production capacity under stochastic lead time demand
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