A coordinated order-up-to inventory control policy for a single supplier and multiple buyers using electronic data interchange

One way to reduce inventory related costs is to shorten the time lag in communication and shipment. Electronic data interchange (EDI) is a potential tool that can help achieve this. The authors develop an analytical model based on a common cycle time approach, for inventory control under stochastic conditions for a vendor and multiple buyers dealing with a single product. The coordination implied by such an approach is facilitated by EDI. The authors present an iterative algorithm for calculating the operating parameters. They show that implementation of this model can be economically desirable to all parties involved.