Multi-vendor integrated procurement-production system under shared transportation and just-in-time delivery system

• Published in: The Journal of the Operational Research Society Vol. 61; no. 11; pp. 1654 - 1666
• Main Authors: Chen, Z X, Sarker, B R
• Format: Journal Article
• Language: English
• Published: London Taylor & Francis 01.11.2010; Palgrave Macmillan; Palgrave Macmillan UK; Taylor & Francis Ltd
• Subjects: Applied sciences; Business and Management; Capital costs; Carpooling; Exact sciences and technology; Firm modelling; Freight; Inventories; inventory; Inventory control; Inventory control, production control. Distribution; Just in time; Logistics; lot size; Management; Manufacturers; Manufacturing; Operational research and scientific management; Operational research. Management science; Operations research; Operations Research/Decision Theory; Optimization; Philosophy; Procurement; Production costs; Purchasing; Raw material costs; Studies; Suppliers; Supply chain management; Theoretical Paper; Theoretical Papers; Total costs; transportation; Transportation costs; Vendors; just-in-time; inventory; purchasing; lot size; procurement; transportation; Procurement; Production system; Travel time; Lean production; Computer integrated manufacturing; Distribution cost; Lot sizing; Economy of transports; Modeling; Inbound logistics; Purchasing; Transportation problem; Just in time; Cooperation; Inventory control; Integrated system; Capacity constraint; Purchases; Cost lowering; Logistics
• ISSN: 0160-5682; 1476-9360
• DOI: 10.1057/jors.2009.115

Just-in-time (JIT) procurement is one of the important elements of lean production system. Successful implementation of JIT needs vendor-manufacturer cooperation on small lot size delivery and inbound logistics cost reduction. Unlike the most recent literature focusing on single-vendor and single-buyer integrated inventory systems, this paper studies a multi-vendor integrated procurement-production inventory system that incorporates delivery and shared transportation costs. A multi-vendor optimal model is developed here for deciding the batch size of vendor's production, and delivery frequencies of different vendors to the manufacturer. Solution procedures for two special cases-uncapacitated and capacitated models are developed; especially, a new approximate method for capacitated model is devised. Numerical examples demonstrate the solution mechanism for the model. The results highlight cooperation between vendors and manufacturers on JIT procurement practices.