The purpose of this paper is to formulate an integrated inventory model for a JIT supply chain in which a central manufacturer and its supplier(s) work together to improve the synergy of the supply chain as a whole. In this model, we are concerned with the central manufacturer and its supplier(s) using the way of exchanging information and implementing long-term purchase contracts jointly make their optimal lot-size decisions over a finite planning horizon, including determination of the numbers of purchasing, production, and delivery. The proposed model is a generalized model and can be extensively used in a JIT environment since we release some traditional assumptions that are extremely strong and unsuitable for practical applications. Meanwhile, we transform the economic lot-size problem into the number problem and then develop the integrated inventory model. As a result, it can help managers to eliminate excess inventories and to meet JIT principles. Through the validation of designing various experimental parameters, the results show that the proposed model is superior to the major existing models in terms of the minimum cost. It is hoped that our model can be used as an effective approach for JIT supply chain practitioners to cooperatively make their procurement, production, and delivery decisions, to maintain long-term stable partnerships, and to improve global competition.
Journal of the Chinese Institute of Industrial Engineers,17(17):301-312.