On the consignment stock of inventories under buyer's warehouse space capacity limitation

A well-known and important research contributed by Lee and Wang (Managing level of consigned inventory with buyer's warehouse capacity constraint, Production Planning and Control, 19(7), 677-685, is revised. Our note indicates incorrectness of the main statement of the theorem that in the case of the buyer's warehouse space capacity limitation W > 0, an optimal CS-policy can be obtained either as a solution of adequate unconstrained problem (if for optimal policy I-b,I- max < W) or as a solution of the auxiliary sharp constrained problem. Numerical counterexample, with appropriate comments, is presented. We also provide a reformulation of the model, and proper conditions for optimal CS-policy.