IDEAS home Printed from https://ideas.repec.org/a/eee/proeco/v225y2020ics0925527319304116.html
   My bibliography  Save this article

An integrated single-vendor multi-buyer production inventory model with transshipments between buyers

Author

Listed:
  • Tarhini, Hussein
  • Karam, Mario
  • Jaber, Mohamad Y.

Abstract

Vendor managed inventory (VMI) is an approach used by several companies to monitor and control stocks of their products. In this paper, we investigate how VMI with a Consignment Stock (CS) policy may exemplify a successful strategy for both buyers and suppliers. CS allows a vendor to stock some or its entire inventory using its buyers’ warehouses. This paper considers the problem of a single vendor with multiple buyers collaborating under VMI with a consignment stock policy. Collaboration between buyers is made possible by allowing transshipments from one buyer to another. Those transshipments pass through multiple redistribution hubs whose locations are determined by considering the inventory levels of buyers and shipment storage capacities between them. This paper shows that transshipments between buyers can be a tool for decreasing the total cost faced by both buyers and their suppliers. Numerical results are also presented to illustrate it and discuss its importance. The cost function is shown to be jointly convex in the shipment sizes between the buyers and them and the vendor under certain conditions, where a genetic algorithm is developed to find the number of shipments between the vendor and buyers.

Suggested Citation

  • Tarhini, Hussein & Karam, Mario & Jaber, Mohamad Y., 2020. "An integrated single-vendor multi-buyer production inventory model with transshipments between buyers," International Journal of Production Economics, Elsevier, vol. 225(C).
    • Handle: RePEc:eee:proeco:v:225:y:2020:i:c:s0925527319304116
    DOI: 10.1016/j.ijpe.2019.107568
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0925527319304116
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ijpe.2019.107568?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Lawrence W. Robinson, 1990. "Optimal and Approximate Policies in Multiperiod, Multilocation Inventory Models with Transshipments," Operations Research, INFORMS, vol. 38(2), pages 278-295, April.
    2. Lu, Lu, 1995. "A one-vendor multi-buyer integrated inventory model," European Journal of Operational Research, Elsevier, vol. 81(2), pages 312-323, March.
    3. Hariga, Moncer & Hassini, Elkafi & Ben-Daya, Mohamed, 2014. "A note on generalized single-vendor multi-buyer integrated inventory supply chain models with better synchronization," International Journal of Production Economics, Elsevier, vol. 154(C), pages 313-316.
    4. Zied Jemai & Yacine Rekik & Rim Kalaï, 2013. "Inventory routing problems in a context of vendor-managed inventory system with consignment stock and transshipment," Post-Print hal-00809640, HAL.
    5. Nils Rudi & Sandeep Kapur & David F. Pyke, 2001. "A Two-Location Inventory Model with Transshipment and Local Decision Making," Management Science, INFORMS, vol. 47(12), pages 1668-1680, December.
    6. Lee, Chungseung & Park, Kun Soo, 2016. "Inventory and transshipment decisions in the rationing game under capacity uncertainty," Omega, Elsevier, vol. 65(C), pages 82-97.
    7. Rad, Reza Hosseini & Razmi, Jafar & Sangari, Mohamad Sadegh & Ebrahimi, Zahra Fallah, 2014. "Optimizing an integrated vendor-managed inventory system for a single-vendor two-buyer supply chain with determining weighting factor for vendor׳s ordering cost," International Journal of Production Economics, Elsevier, vol. 153(C), pages 295-308.
    8. Gümüs, Mehmet & Jewkes, Elizabeth M. & Bookbinder, James H., 2008. "Impact of consignment inventory and vendor-managed inventory for a two-party supply chain," International Journal of Production Economics, Elsevier, vol. 113(2), pages 502-517, June.
    9. Woo, York Y. & Hsu, Shu-Lu & Wu, Soushan, 2001. "An integrated inventory model for a single vendor and multiple buyers with ordering cost reduction," International Journal of Production Economics, Elsevier, vol. 73(3), pages 203-215, October.
    10. Boyaci, Tamer & Gallego, Guillermo, 2002. "Coordinating pricing and inventory replenishment policies for one wholesaler and one or more geographically dispersed retailers," International Journal of Production Economics, Elsevier, vol. 77(2), pages 95-111, May.
    11. Diabat, Ali, 2014. "Hybrid algorithm for a vendor managed inventory system in a two-echelon supply chain," European Journal of Operational Research, Elsevier, vol. 238(1), pages 114-121.
    12. Diks, E. B. & de Kok, A. G., 1996. "Controlling a divergent 2-echelon network with transshipments using the consistent appropriate share rationing policy," International Journal of Production Economics, Elsevier, vol. 45(1-3), pages 369-379, August.
    13. Glock, C. H., 2012. "The joint economic lot size problem: a review," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 57811, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
    14. Ji, Xiang & Sun, Jiasen & Wang, Zebin, 2017. "Turn bad into good: Using transshipment-before-buyback for disruptions of stochastic demand," International Journal of Production Economics, Elsevier, vol. 185(C), pages 150-161.
    15. Glock, Christoph H., 2012. "The joint economic lot size problem: A review," International Journal of Production Economics, Elsevier, vol. 135(2), pages 671-686.
    16. Braglia, Marcello & Castellano, Davide & Frosolini, Marco, 2014. "Safety stock management in single vendor–single buyer problem under VMI with consignment stock agreement," International Journal of Production Economics, Elsevier, vol. 154(C), pages 16-31.
    17. Villa, Sebastián & Castañeda, Jaime Andrés, 2018. "Transshipments in supply chains: A behavioral investigation," European Journal of Operational Research, Elsevier, vol. 269(2), pages 715-729.
    18. Dehghani, Maryam & Abbasi, Babak, 2018. "An age-based lateral-transshipment policy for perishable items," International Journal of Production Economics, Elsevier, vol. 198(C), pages 93-103.
    19. Glock, C. H. & Kim, T., 2012. "A joint economic lot sizemodel with returnable transport items," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 59079, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
    20. Kim, Taebok & Hong, Yushin & Chang, Soo Young, 2006. "Joint economic procurement--production-delivery policy for multiple items in a single-manufacturer, multiple-retailer system," International Journal of Production Economics, Elsevier, vol. 103(1), pages 199-208, September.
    21. Viswanathan, S. & Piplani, Rajesh, 2001. "Coordinating supply chain inventories through common replenishment epochs," European Journal of Operational Research, Elsevier, vol. 129(2), pages 277-286, March.
    22. Zied Jemai & Yacine Rekik & Rim Kalai, 2013. "Inventory routing problems in a context of vendor-managed inventory system with consignment stock and transshipment," Post-Print hal-02312969, HAL.
    23. Hoque, M.A., 2011. "An optimal solution technique to the single-vendor multi-buyer integrated inventory supply chain by incorporating some realistic factors," European Journal of Operational Research, Elsevier, vol. 215(1), pages 80-88, November.
    24. Zavanella, Lucio & Zanoni, Simone, 2009. "A one-vendor multi-buyer integrated production-inventory model: The 'Consignment Stock' case," International Journal of Production Economics, Elsevier, vol. 118(1), pages 225-232, March.
    25. Siajadi, Hans & Ibrahim, Raafat N. & Lochert, Paul B., 2006. "Joint economic lot size in distribution system with multiple shipment policy," International Journal of Production Economics, Elsevier, vol. 102(2), pages 302-316, August.
    26. Banerjee, Avijit & Banerjee, Snehamay, 1994. "A coordinated order-up-to inventory control policy for a single supplier and multiple buyers using electronic data interchange," International Journal of Production Economics, Elsevier, vol. 35(1-3), pages 85-91, June.
    27. Hoque, M.A., 2008. "Synchronization in the single-manufacturer multi-buyer integrated inventory supply chain," European Journal of Operational Research, Elsevier, vol. 188(3), pages 811-825, August.
    28. M Hariga & M Gumus & M Ben-Daya & E Hassini, 2013. "Scheduling and lot sizing models for the single-vendor multi-buyer problem under consignment stock partnership," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 64(7), pages 995-1009, July.
    29. repec:inm:ormnsc:v:30:y:1984:i:12:p:1524-1539(2 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Adel A. Alamri, 2023. "Carbon Emissions Effect on Vendor-Managed Inventory System Considering Displaced Re-Start-Up Production Time," Logistics, MDPI, vol. 7(4), pages 1-29, September.
    2. Ghasemi, Elaheh & Lehoux, Nadia & Rönnqvist, Mikael, 2024. "A multi-level production-inventory-distribution system under mixed make to stock, make to order, and vendor managed inventory strategies: An application in the pulp and paper industry," International Journal of Production Economics, Elsevier, vol. 271(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Po-Yu Chen, 2017. "Optimal Retail Price Model for Partial Consignment to Multiple Retailers," Complexity, Hindawi, vol. 2017, pages 1-11, December.
    2. Zavanella, Lucio & Zanoni, Simone, 2009. "A one-vendor multi-buyer integrated production-inventory model: The 'Consignment Stock' case," International Journal of Production Economics, Elsevier, vol. 118(1), pages 225-232, March.
    3. Dhahri, Akrem & Gharbi, Ali & Ouhimmou, Mustapha, 2022. "Integrated production-delivery control policy for an unreliable manufacturing system and multiple retailers," International Journal of Production Economics, Elsevier, vol. 245(C).
    4. Sajadieh, Mohsen S. & Larsen, Christian, 2015. "A coordinated manufacturer-retailer model under stochastic demand and production rate," International Journal of Production Economics, Elsevier, vol. 168(C), pages 64-70.
    5. Glock, Christoph H., 2012. "The joint economic lot size problem: A review," International Journal of Production Economics, Elsevier, vol. 135(2), pages 671-686.
    6. Ali Ekici & Baṣak Altan & Okan Örsan Özener, 2016. "Pricing decisions in a strategic single retailer/dual suppliers setting under order size constraints," International Journal of Production Research, Taylor & Francis Journals, vol. 54(7), pages 1887-1898, April.
    7. Hariga, Moncer & As’ad, Rami & Khan, Zeinab, 2017. "Manufacturing-remanufacturing policies for a centralized two stage supply chain under consignment stock partnership," International Journal of Production Economics, Elsevier, vol. 183(PB), pages 362-374.
    8. Wu, Kan & Yuan, Xue-Ming, 2016. "Optimal production-inventory policy for an integrated multi-stage supply chain with time-varying demandAuthor-Name: Zhao, Shi Tao," European Journal of Operational Research, Elsevier, vol. 255(2), pages 364-379.
    9. Lee, W. & Wang, S.-P. & Chen, W.-C., 2017. "Forward and backward stocking policies for a two-level supply chain with consignment stock agreement and stock-dependent demand," European Journal of Operational Research, Elsevier, vol. 256(3), pages 830-840.
    10. Beatriz Abdul-Jalbar & Roberto Dorta-Guerra & José M. Gutiérrez & Joaquín Sicilia, 2021. "Production/Inventory Policies for a Two-Echelon System with Credit Period Incentives," Mathematics, MDPI, vol. 9(15), pages 1-25, July.
    11. Chan, Chi Kin & Fang, Fei & Langevin, André, 2018. "Single-vendor multi-buyer supply chain coordination with stochastic demand," International Journal of Production Economics, Elsevier, vol. 206(C), pages 110-133.
    12. Hariga, Moncer & Hassini, Elkafi & Ben-Daya, Mohamed, 2014. "A note on generalized single-vendor multi-buyer integrated inventory supply chain models with better synchronization," International Journal of Production Economics, Elsevier, vol. 154(C), pages 313-316.
    13. Hesham K. Alfares & Ahmed M. Attia, 2017. "A supply chain model with vendor-managed inventory, consignment, and quality inspection errors," International Journal of Production Research, Taylor & Francis Journals, vol. 55(19), pages 5706-5727, October.
    14. AlDurgam, Mohammad & Adegbola, Kehinde & Glock, Christoph H., 2017. "A single-vendor single-manufacturer integrated inventory model with stochastic demand and variable production rate," International Journal of Production Economics, Elsevier, vol. 191(C), pages 335-350.
    15. Glock, Christoph H. & Kim, Taebok, 2015. "The effect of forward integration on a single-vendor–multi-retailer supply chain under retailer competition," International Journal of Production Economics, Elsevier, vol. 164(C), pages 179-192.
    16. Sarker, Bhaba R. & Rochanaluk, Ratkrit & Yi, Huizhi & Egbelu, Pius J., 2014. "An operational policy for a three-stage distributive supply chain system with retailers’ backorders," International Journal of Production Economics, Elsevier, vol. 156(C), pages 332-345.
    17. Lin, Feng & Jia, Tao & Wu, Feng & Yang, Zhen, 2019. "Impacts of two-stage deterioration on an integrated inventory model under trade credit and variable capacity utilization," European Journal of Operational Research, Elsevier, vol. 272(1), pages 219-234.
    18. Braglia, Marcello & Castellano, Davide & Frosolini, Marco, 2014. "Safety stock management in single vendor–single buyer problem under VMI with consignment stock agreement," International Journal of Production Economics, Elsevier, vol. 154(C), pages 16-31.
    19. Glock, Christoph H., 2012. "Coordination of a production network with a single buyer and multiple vendors," International Journal of Production Economics, Elsevier, vol. 135(2), pages 771-780.
    20. K. F. Mary Latha & M. Ganesh Kumar & R. Uthayakumar, 2021. "Two echelon economic lot sizing problems with geometric shipment policy backorder price discount and optimal investment to reduce ordering cost," OPSEARCH, Springer;Operational Research Society of India, vol. 58(4), pages 1133-1163, December.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:proeco:v:225:y:2020:i:c:s0925527319304116. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ijpe .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.