An integrated equal-lots policy for shipping a vendor's final production batch to a single buyer under linearly decreasing demand

This paper considers a supply chain in which a vendor supplies a product to a buyer. The vendor is about to manufacture the final batch of the product at a finite rate and then periodically ship the output to the buyer. The buyer then consumes the product at a linearly decreasing demand rate. Most previous work on this topic has been based on the assumption of fixed demand rate. Costs are attached to the manufacturing batch setup, the delivery of a shipment, and stockholding at the vendor and buyer. The objective is to determine the number of shipments and sizes of those shipments which minimise the total cost-assuming the vendor and buyer collaborate and find a way of sharing the consequent benefits. We show how the optimal policy may be derived when the shipments size are identical. We illustrate this policy with numerical examples. (C) 2008 Elsevier B.V. All rights reserved.