1. ¹Sun Yat-Sen University, Guangzhou, China
2. ²Louisiana State University, Baton Rouge, USA

Correspondence: BR Sarker, Department of Industrial Engineering, Louisiana State University, Baton Rouge, LA70803, USA. E-mail: bsarker@lsu.edu

Received 19 October 2008; Accepted 4 August 2009; Published online 28 October 2009.

Abstract

Just-in-time (JIT) procurement is one of the important elements of lean production system. Successful implementation of JIT needs vendor-manufacturer cooperation on small lot size delivery and inbound logistics cost reduction. Unlike the most recent literature focusing on single-vendor and single-buyer integrated inventory systems, this paper studies a multi-vendor integrated procurement-production inventory system that incorporates delivery and shared transportation costs. A multi-vendor optimal model is developed here for deciding the batch size of vendor's production, and delivery frequencies of different vendors to the manufacturer. Solution procedures for two special cases—uncapacitated and capacitated models are developed; especially, a new approximate method for capacitated model is devised. Numerical examples demonstrate the solution mechanism for the model. The results highlight cooperation between vendors and manufacturers on JIT procurement practices.