Article ID: | iaor20002678 |
Country: | United Kingdom |
Volume: | 37 |
Issue: | 11 |
Start Page Number: | 2463 |
End Page Number: | 2475 |
Publication Date: | Jan 1999 |
Journal: | International Journal of Production Research |
Authors: | Hill Roger M. |
Keywords: | inventory |
This paper considers the problem of a vendor (manufacturer) supplying a product to a buyer (customer). The vendor manufactures the product in batches at a finite rate and ships the output to the buyer. The buyer then consumes the product at a fixed rate. The objective is to minimize the mean total cost per unit time of manufacturing set-up, stock transfer and stock holding. Previously published work has concentrated on finding optimal solutions from within given classes of policy. We derive the structure of the globally-optimal solution, set out an algorithm for obtaining it and illustrate the process with two numerical examples.