A seller-buyer supply chain model with exponential distribution lead time

Authors

1 Department of Industrial Engineering, Science and Research Branch, Islamic Azad University, Tehran, 14778, Iran

2 Department of Industrial Engineering, K.N. Toosi University of Technology, Tehran 1439955471, Iran

Abstract

Supply chain is an accepted way of remaining in the competition in today's rapidly changing market. This paper presents a coordinated seller-buyer supply chain model in two stages, which is called Joint Economic Lot Sizing (JELS) in literature. The delivery activities in the supply chain consist of a single raw material. We assume that the delivery lead time is stochastic and follows an exponential distribution. Also, the shortage during the lead time is permitted and completely back-ordered for the buyer. With these assumptions, the annual cost function of JELS is minimized. At the end, a numerical example is presented to show that the integrated approach considerably improves the costs in comparison with the independent decisions by seller and buyer.

Keywords