Reducing vendor delivery uncertainties in a JIT environment

The article begins with a description of why deliveries are critical in the JIT environment and why vendee pickup from local vendors can be a better alternative than vendor delivery. When a manufacturer manages its own inbound local deliveries it benefits from more timely information on upsets, reduced transportation costs, reduced transaction costs, and most importantly, reduced uncertainty in deliveries. The authors then turn to a model for how a schedule JIT pickups. This model addresses the following ‘JIT Vendor Pickup Problem’: For a given number of vehicles with limited capacity, find a one-week JIT vendor pickup schedule that will minimize the total incremental carrying, travel, and pickup costs subject to the constraint that the vendee does not run out of any item from any vendor. In the above problem definition, the demand rates for all items are assumed to be constant over the short term. This model can be imbedded in a computer-based decision support system to facilitate the daily scheduling of the pickups from the vendors. In the conclusion, the authors deal with the expected benefits to the vendee for managing its own incoming JIT pickups and then propose a model that could be used to implement this concept.