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Journal ArticleDOI

A joint economic-lot-size model for purchaser and vendor

01 Jul 1986-Decision Sciences (Blackwell Publishing Ltd)-Vol. 17, Iss: 3, pp 292-311
TL;DR: In this article, a joint economic-lot-size model for a special case where a vendor produces to order for a purchaser on a lot-for-lot basis under deterministic conditions is developed.
Abstract: In a typical purchasing situation, the issues of price, lot sizing, etc, usually are settled through negotiations between the purchaser and the vendor Depending on the existing balance of power, the end result of such a bargaining process may be a near-optimal or optimal ordering policy for one of the parties (placing the other in a position of significant disadvantage) or, sometimes, inoptimal policies for both parties This paper develops a joint economic-lot-size model for a special case where a vendor produces to order for a purchaser on a lot-for-lot basis under deterministic conditions The focus of this model is the joint total relevant cost It is shown that a jointly optimal ordering policy, together with an appropriate price adjustment, can be beneficial economically for both parties or, at the least, does not place either at a disadvantage
Citations
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Journal ArticleDOI
TL;DR: This paper reviews, annotates, and classfies 74 related articles which have appeared since 1966 and specific attention is given to the criteria and analytical methods used in the vendor selection process.

2,089 citations


Cites background from "A joint economic-lot-size model for..."

  • ...Banerjee (1986) , "A joint economic-lot-size model for purchaser and vendor", - net price, delivery, - general industrial purchasing, - joint economic lot sizing model conceptually developed....

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  • ... Banerjee (1986) , "On "A quantity discount pricing model to increase vendor profits .......

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  • ...Banerjee 1986 X Banerjee 1986 Bender et al. 1985 X X...

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  • ...Anthony and Buffa 1987 X Banerjee 1986 X Banerjee 1986...

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Journal ArticleDOI
TL;DR: In this paper, the authors review the literature addressing coordinated planning between two or more stages of the supply chain, placing particular emphasis on models that would lend themselves to a total supply chain model.

1,319 citations

Book ChapterDOI
01 Jan 1999
TL;DR: A review of model-based research on contracts in the supply chain setting and a taxonomy for work in this area can be found in this paper, where a survey of the Uterature is provided.
Abstract: In this review, we summarize model-based research on contracts in the supply chain setting and provide a taxonomy for work in this area. During our discussions it became clear that the field has developed in many directions at once. Furthermore, as we surveyed the Uterature, it was not obvious what constitutes a contract in this context. While the nomenclature “supply chain management” is relatively new, many of the problems that are addressed are not. In particular, mathematical models for optimizing inventory control have a long history as a significant part of the mainstream of operations research and operations management. Inventory modeling, per se, dates to the early part of the century and the ideas of a Westinghouse engineer named Ford Harris (1915). A natural issue to address first is what is meant by supply chain management (SCM) research and how it relates to the vast body of work constituting classical inventory theory.

706 citations

Journal ArticleDOI
TL;DR: In this paper, a more general joint economic-lot-size model is suggested and it is shown to provide a lower or equal joint total relevant cost as compared to the model of Banerjee.
Abstract: Banerjee [1] developed a joint economic-lot-size model for the case where a vendor produces to order for a purchaser on a lot-for-lot basis under deterministic conditions. The assumption of lot-for-lot bases is restrictive in nature. In this note, a more general joint economic-lot-size model is suggested and it is shown to provide a lower or equal joint total relevant cost as compared to the model of Banerjee.

654 citations

Journal ArticleDOI
TL;DR: In this paper, the optimal quantity discount policy under asymmetric information was derived and compared to the situation where the supplier has full information about the buyer's cost structure and compared with the situation when the supplier does not have full information.
Abstract: In the supply-chain literature, an increasing body of work studies how suppliers can use incentive schemes such as quantity discounts to influence buyers' ordering behaviour, thus reducing the supplier's (and the total supply chain's) costs. Various functional forms for such incentive schemes have been proposed, but a critical assumption always made is that the supplier has full information about the buyer's cost structure. We derive the optimal quantity discount policy under asymmetric information and compare it to the situation where the supplier has full information.

538 citations


Cites methods from "A joint economic-lot-size model for..."

  • ...The optimal contract is equivalent to the selection of the joint economic lot size Q j(h b), as in Goyal (1976), Banerjee (1986), and others, leaving all efficiency gains to the supplier....

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References
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Book
01 Jan 1963

2,222 citations

Book
01 Jan 1979
TL;DR: In this article, an in-depth discussion of the major decisions in production planning, scheduling, and inventory management faced by organizations, both private and public, is presented, as well as the latest systems used to make decisions, including Just-in-Time Manufacturing, KANBAN, Distribution Requirements Planning and PUSH Control.
Abstract: An in-depth discussion of the major decisions in production planning, scheduling, and inventory management faced by organizations, both private and public. Strategic and operational issues are covered, as well as the latest systems used to make decisions, including Just-in-Time Manufacturing, KANBAN, Distribution Requirements Planning, and PUSH Control. A series of cases focusing on one organization complement the text's discussion, and several problem sets are also included. An extensive list of references allows the advanced student to pursue topics of interest in more detail.

1,541 citations

Journal ArticleDOI
TL;DR: In this paper, it was shown that changes in the inflation rate should not affect the cost of capital that is utilized in the economic order quantity (EOQ) formula for determining order quantities.
Abstract: The classical analysis of the economic order quantity (EOQ) problem ignores the effect of inflation. When a firm's cost factors are expected to rise at an annual rate of 10 percent or more, what adjustments in order quantities should the firm make to control its lot-size inventory (or cycle stock)? Using a model that includes both inflationary trends and time discounting, it is concluded that inflation brings no incentive either to increase or to decrease order quantities. In addition, order quantities can be computed using the classical EOQ formula under inflationary conditions, provided that the cost of capital invested in inventory is interpreted as an inflation-free cost. This interpretation implies that changes in the inflation rate should not affect the cost of capital that is utilized in the EOQ formula for determining order quantities.

26 citations

Journal ArticleDOI
TL;DR: In this paper, a stochastic version of the classical economic lot size model is developed, which yields the traditional square root formula where the constant demand term is replaced by mean demand.
Abstract: Most continuous time inventory models which allow for the stochastic nature of demands usually include a delivery lag. This disguises a close link between deterministic and stochastic formulations of the inventory problem. By assuming that there is no delivery lag a stochastic version of the classical economic lot size model is developed. It yields the traditional square root formula where the constant demand term is replaced by mean demand.

11 citations