An integrated inventory model for a single vendor and multiple buyers with ordering cost reduction

Article Abstract:

Forming strategic alliances and utilizing modern information technologies have been the two most important ways for firms to gain such competitive advantages as lower logistics costs and secure customers' loyalty. In this paper, we consider an integrated inventory system where a single vendor purchases and processes raw materials in order to deliver finished items to multiple buyers. The vendor and all buyers are willing to invest in reducing the ordering cost (e.g., establishing an electronic data interchange based inventory control system) in order to decrease their joint total cost. The amount of investment determines the planned ordering cost and hence affects their replenishment decisions. One major managerial implication from this ordering cost reduction is that the efforts to streamline and speedup transactions via the application of information technologies may result in a higher degree of coordination and automation among allied trading parties. An analytical model is developed to derive the optimal investment amount and replenishment decisions for both vendor and buyers. The exponential ordering cost function is then applied to our general model, and a numerical analysis is performed to provide interesting insights of the model. Numerical results show that the vendor and all the buyers can benefit directly from substantial cost savings by this ordering cost reduction investment. Keywords: Inventory; Integrated model; Vendor; Multiple buyers; Ordering cost

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An inventory control model using fuzzy logic

Article Abstract:

A model based on fuzzy logic is proposed for inventory control. The periodic review model of inventory control with variable order quantity is considered. The model takes into account the dynamics of production-inventory system in a control theoretic approach. The control module combines fuzzy logic with proportional-integral-derivative (PID) control algorithm. It simulates the decision support system to maintain the inventory of the finished product at the desired level in spite of variations in demand. The effectiveness of the proposed control model is illustrated using the actual data of a typical packaging organization operating in the Sultanate of Oman. Keywords: Inventory control; Fuzzy logic; Control theory; System dynamics; Decision support system

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Optimal multiple delivery schedule for demand in logistic model

Article Abstract:

Traditional analysis for determining inventory levels assumes constant or normally distributed demand over the period of analysis, which is not suitable for products of short life-cycles as commonly found in fashion-related products. This paper utilizes a logistic growth function and a logistic substitution function to model the growth, saturation, and decline of such products with varying yet dependent demands. A heuristic that finds the minimum cost single-order multiple deliveries schedule for the logistic demand is developed to facilitate the use of the logistic model. Keywords: Logistic model; Product life-cycle model; News vendor model; Single-order multiple deliveries

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