Mona Ahmadi Rad - Department of Industrial Engineering, K.N.Toosi University of Technology
Farid Khoshalhan - Department of Industrial Engineering, K.N.Toosi University of Technology, Tehran

In this paper, an integrated inventory model is investigated. Single vendor and single buyer are considered and shortage is allowed for the buyer. The vendor makes the production set up every time the buyer places an order and supplies on a lot for lot basis. With these assumptions, the joint economic lot size model is introduced and the minimum joint total relevant cost and optimal order quantity and optimal shortage quantity are obtained for both the buyer and the vendor at the same time. Numerical example is given and then Sensitivity analysis is performed to study the effect of changes in the system parameters.

integrated inventory model, backorder, buyer, vendor