Keywords: integrated inventory model; probabilistic demand; safety stock; simulation model; supply chain.
Wakhid Ahmad Jauhari, Yusuf Priyandari *)
LPPM UNS, Penelitian, DP2M, Publikasi Internasional, 2009
In this paper we consider single vendor single buyer integrated inventory model with probabilistic demand and equal delivery lot size. The model contributes to the current literature by relaxing the deterministic demand assumption which has been used for almost all integrated inventory models.The objective is to minimize expected total costs incurred by the vendor and the buyer. We develop effective iterative procedures for finding the optimal solution. Numerical examples are used to illustrate the benefit of integration. A sensitivity analysis is performed to explore the effect of key parameters on delivery lot size, safety factor, production lot size factor and the expected total cost. The results of the numerical examples indicate that our models can achieve a significant amount of savings. Finally, we compare the results of our proposed model with a simulation model.