A Piecewise Approach for the Cooperative Inventory Model with Controllable Lead Time

In this paper, we propose a vendor-buyer cooperative inventory model with controllable lead time over a finite planning horizon which is different from the model of Chang et al. (2006) over an infinite planning horizon. They solved the problem using a calculus-based method and iterative procedure to minimize the total relevant cost. These algorithms have been generally applied to many business aspects such as supply chain management and manufacturing control. However, a calculus-based method limits the applicability to a finite planning horizon problem because decision variables should be executable integers. Furthermore, it will increase the difficulty and complexity of the algorithm when resource constraints are considered. In addition, the iterative procedure is a tedious trial-and-error process. In light of the above-mentioned problems, we extend the model of Chang et al. (2006) to a finite planning horizon and use a piecewise linearization method to simplify the complex iterative procedure and improve the limitation on the traditional calculus-based method for resource constraints and the integer requirement. The validity of the method can be demonstrated by using the example of Chang et al. (2006). Finally, an additional resource constraints example is also provided to demonstrate the usefulness of the proposed model.

Project ID:PB10406-1320
External Project ID:MOST104-2410-H182-021-MY2