An integrated producer-buyer relationship in the environment of EMQ and JIT production systems

The philosophy of this paper is to build up a strong bond between a producer and a buyer. In this respect, an integrated producer-buyer inventory model with constant demand and small lot size is framed in two different production environments: an EMQ (economic manufacturing quantity)-based production environment and a JIT (just-in-time)-based production environment. Imperfect production with rework is considered for the producer while shortage and backlogging are introduced for the buyer. The joint total cost of the producer and buyer is minimised to determine the optimum rate of production and optimum shortage period for both cases. A comparative study is performed between these two cases using the numerical results in order to make a decision concerning the choice of a more convenient production system for small lot sizes. Sensitivity analyses are carried out together for both cases.