Joint economic lot size in distribution system with multiple shipment policy

This paper presents a new methodology to obtain the Joint Economic Lot size in the case where multiple buyers are demanding one type of item from a single vendor. The shipment policy is found and a new model is proposed to minimize the joint total relevant cost (JTRC) for both vendor and buyer(s). Considering the two-buyer and more than two-buyer cases, exact and approximate optimum solutions were obtained. The benefits of the new model were illustrated in terms of two different ratios: production rate to demand rate, and transportation cost to holding cost. A sensitivity analysis was conducted to test the robustness of the new model.