Independent Optimization Research Articles

A comparison of alternative joint vendor-purchaser lot-sizing models

Abstract This paper provides a comparative analysis of two sets of alternative joint lot-sizing models for the general one-vendor, many-nonidentical-purchasers case. Specifically, the basic joint economic lot size (irJELS) and individually responsible and rational decision (IRDD) models, and the simultaneous setup cost and order cost reduction versions are explored. Models for the latter situation are derived by the use of classical optimization techniques. A numerical example is presented which provides the basis for comparison of the models with the results of independent optimization (IO). For the basic models the previously reported advantages of IRRD are refuted. In the simultaneous investment case both the vendor and the purchasers realize significant savings over IO when the JELS policy is followed. This is not true for IRRD. This suggests that when an environment of co-operation between the parties has been established the JELS is a superior policy.