Article ID: | iaor20041965 |
Country: | United Kingdom |
Volume: | 23 |
Issue: | 3 |
Start Page Number: | 163 |
End Page Number: | 169 |
Publication Date: | May 2002 |
Journal: | Optimal Control Applications & Methods |
Authors: | Wee Hui-Ming, Yang P.C. |
Keywords: | control processes |
In previous modellings of the vendor–buyer system, the buyer's economic order quantity and the vendor's optimal number of deliveries are derived by setting the first derivatives to zero and solving the simultaneous equations. The Hessian matrix of second derivatives is used to prove the convexity of the objective function. This procedure can be difficult for students who lack the background of differential calculus. This study develops algebraically the optimal policy of the integrated vendor–buyer inventory system without using differential calculus. A significant cost reduction is also achieved when Goyal's model is modified.