Abstract
The classic single-item, deterministic-demand, integrated vendor-buyer model is revisited. The decision problem may also be viewed as that of one centralized firm, dealing with a two-level EOQ-like supply chain with finite production rates. It is sought to optimize the production lot-size and the integral number of its shipments, in equal batches, from the vendor to the buyer. While the problem calls for discrete optimization techniques, we introduced a continuous model where one can take derivatives with respect to both variables. In this short paper, we establish a 98.5% lower bound on the accuracy of this continuous model.
Original language | English |
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Pages (from-to) | 805-810 |
Number of pages | 6 |
Journal | International Journal of Production Economics |
Volume | 114 |
Issue number | 2 |
DOIs | |
State | Published - 1 Aug 2008 |
Keywords
- Continuous approximation
- Production-inventory
- Supply chains
- Vendor-buyer models
ASJC Scopus subject areas
- Business, Management and Accounting (all)
- Economics and Econometrics
- Management Science and Operations Research
- Industrial and Manufacturing Engineering