Optimal production-delivery policy for a vendor-buyers integrated system considering postponed simultaneous delivery

Delivery consolidation is an important strategy adopted in multi-buyer distribution channels to coordinate production-delivery decisions among all participating members across the entire supply chain. In view of the increasing importance attached to higher capacity utilization, we use the shortest processing time (SPT) rule as the lever to reconsider the integer-ratio distribution policy so that a smooth production schedule can be achieved for the integrated inventory model. The proposed policy is first applied to a single-vendor two-buyer integrated system where capacity utilization is explicitly incorporated into the process of production-delivery planning. Two new models with four distinct cases are explored, and theoretical results are derived to obtain solution procedures as well as the optimal solution. Through numerical comparisons of solutions acquired from different delivery policies, both the SPT delivery sequence and the capacity utilization are verified to be effective for improving the performance of the integrated system. Additionally, in view of the application, an enumeration-based grouping method is established to extend the proposed model to the general multi-buyer scenario.