Title: Joint economic lot size (JELS) model for single-vendor single-buyer with variable production rate and partial backorder

Authors: Wakhid Ahmad Jauhari; I. Nyoman Pujawan

Addresses: Department of Industrial Engineering, Sebelas Maret University, Jl. Ir Sutami 36 A, Surakarta 57126, Indonesia ' Department of Industrial Engineering, Sepuluh Nopember Institute of Technology, Kampus ITS Keputih Sukolilo, Surabaya 60111, Indonesia

Abstract: This paper presents joint economic lot size (JELS) models under stochastic demand for single-vendor single-buyer system by synchronising ordering, production and raw material procurement cycles. We consider variable production rate and partial backorder in the proposed model. An iterative procedure is employed to determine simultaneously safety factor, delivery lot size, delivery frequency, production batch, raw material lot size and production rate for minimising total cost. We investigate the behaviour of the model with the use of numerical analysis. Our study indicates that considering variable production rate in the model results in lower total cost compared to the case where the production rate is assumed to be fixed. Our study also shows that the increase in demand uncertainty leads to higher total costs, but the buyer absorbed most of the increase. In addition, we also show that the minimum total cost is obtained when the shortages are fully, rather than partially, backordered.

Keywords: joint economic lot size; JELS model; inventory modelling; variable production rate; supply chain management; SCM; variable production rate; partial backordering; stochastic demand.

DOI: 10.1504/IJOR.2014.060517

International Journal of Operational Research, 2014 Vol.20 No.1, pp.91 - 108

Received: 16 Aug 2012
Accepted: 13 Nov 2012
Published online: 21 Jun 2014 *

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