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Scheduling and lot sizing models for the single-vendor multi-buyer problem under consignment stock partnership

Author

Listed:
  • M Hariga

    (Engineering Systems Management Program, College of Engineering, American University of Sharjah, Sharjah, UAE)

  • M Gumus

    (Department of Marketing, School of Business and Management, American University of Sharjah, Sharjah, UAE)

  • M Ben-Daya

    (King Fahd University of Petroleum & Minerals, Dhahran, Saudi Arabia)

  • E Hassini

    (McMaster University, Hamilton, ON, Canada)

Abstract

We consider a centralized supply chain composed of a single vendor serving multiple buyers and operating under consignment stock arrangement. Solving the general problem is hard as it requires finding optimal delivery schedule to the buyers and optimal production lot sizes. We first provide a nonlinear mixed integer programming formulation for the general scheduling and lot sizing problem. We show that the problem is NP-hard in general. We reformulate the problem under the assumption of ‘zero-switch rule’. We also provide a simple sequence independent lower bound to the solution of the general model. We then propose a heuristic procedure to generate a near-optimal delivery schedule. We assess the cost performance of that heuristic by conducting sensitivity analysis on the key model parameters. The results show that the proposed heuristic promises substantial supply-chain cost savings that increase as the number of buyers increases.

Suggested Citation

  • 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.
    • Handle: RePEc:pal:jorsoc:v:64:y:2013:i:7:p:995-1009
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    Citations

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    Cited by:

    1. 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.
    2. Po-Yu Chen, 2017. "Optimal Retail Price Model for Partial Consignment to Multiple Retailers," Complexity, Hindawi, vol. 2017, pages 1-11, December.
    3. Hossain, Md Shahriar J. & Ohaiba, Mohamed M. & Sarker, Bhaba R., 2017. "An optimal vendor-buyer cooperative policy under generalized lead-time distribution with penalty cost for delivery lateness," International Journal of Production Economics, Elsevier, vol. 188(C), pages 50-62.
    4. 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).

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