SYNCHRONIZING INDIVIDUALLY OPTIMAL CYCLE TIMES ACROSS MULITI-BUYERS AND MULTI-PRODUCTS

A joint problem of order delivery, setup reduction, and cost-sharing in a two-echelon inventory system in which a vendor supplies multiple products to a group of buyers is studied here. The basic premise is that buyers have independently implemented setup reduction programs to acquire benefits from small order sizes. Doing so, however, causes the buyers' individually optimal order cycles to be differ from that of the vendor. In conjunction with this, two models are considered. In the first model, a multi-buyers single product situation is considered in which the vendor implements a joint supply cycle policy. However, buyers, as the dominant party, insist after implementing the individually optimal setup reduction that the vendor accept their individually optimal order schedules. In the second model. a multi-products, single buyer situation is considered in which the buyer implements a joint order policy. Here, the vendor, as the dominant party, refuses to cooperate fully with the buyer's individually reduced joint order schedule, and designs his own individually optimal setup reduction mix for each product under a given budget constraint. This led to a study of an integrated Setup Reduction/Break-even Pricing Policy for each situation to eliminate mismatches in individually optimal cycle times.