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International Journal for Engineering Modelling, Vol. 24 No. 1-4, 2011.

Original scientific paper

Effect of variable shipping frequency on production-distribution policy in a vendor-buyer integrated system

Yuan-Shyi Peter Chiu ; Department of Industrial Engineering, Chaoyang University of Technology, Gifong East Road, Wufong, Taichung 413, TAIWAN
Ching-Yun Chang ; Department of Industrial Engineering, Chaoyang University of Technology, Gifong East Road, Wufong, Taichung 413, TAIWAN
Chia-Kuan Ting ; Department of Industrial Engineering, Chaoyang University of Technology, Gifong East Road, Wufong, Taichung 413, TAIWAN
Singa Wang Chiu ; Department of Business Administration, Chaoyang University of Technology, Gifong East Road, Wufong, Taichung 413, TAIWAN

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Abstract

This paper investigates the effect of variable shipping frequency on production-distribution policy in a vendor-buyer integrated system. In a recent article Chiu et al. [1] derived the optimal replenishment lot size for an economic production quantity problem with multi-delivery and quality assurance, based on an assumption that the number of shipment is a given constant. However, in a vendor-buyer integrated system in supply chain environment, joint determination of replenishment lot size and number of shipments may help such a system to gain significant
competitive advantage in terms of becoming a low-cost producer as well as having tight linkage to customer. For this reason, the present study extends the work of Chiu et al. [1] by considering shipping frequency as one of the decision variables and incorporating customer’s stock holding cost into system cost analysis. Hessian matrix equations are employed to certify the convexity of cost function that contains two decision variables, and the effect of variable shipping frequency on production-distribution policy is investigated. A numerical example is provided to demonstrate practical usage of the research result.

Keywords

variable shipping policy; production-distribution system; supply chains; vendor-buyer system; lot size; rework

Hrčak ID:

184972

URI

https://hrcak.srce.hr/184972

Publication date:

26.10.2012.

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