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An integrated vendor-buyer model with stock-dependent demand

Research output: Working paperResearch


  • L 2009 01

    Final published version, 357 KB, PDF document

  • Mohsen S. Sajadieh, Sharif University of Technology, Iran, Islamic Republic of
  • Anders Thorstenson
  • Mohammad R. Akbari Jokar, Sharif University of Technology, Iran, Islamic Republic of
  • CORAL - Centre for Operations Research Applications in Logistics
  • Department of Business Studies
We develop an integrated vendor-buyer model for a two-stage supply chain. The vendor manufactures the product at a finite rate and delivers it in a number of equal-sized batches to the buyer. The items delivered are kept in the buyer's warehouse and are then presented to the end customers in a display area. The end-customer demand is assumed to be positively dependent on the amount of items shown in the display area. With the proposed model we determine the buyer's optimal shipment quantity and number of shipments, as well as the vendor's optimal production batch. The objective is to maximize total supply chain profit. The numerical analysis shows that it is more profitable for the buyer and the vendor to cooperate in situations when the demand is more stock-dependent. The analysis also shows the effect of double marginalization in this integrated vendor-buyer model.
Original languageEnglish
Place of publicationAarhus
PublisherAarhus School of Business, Aarhus University, Department of Business Studies
Number of pages37
ISBN (Electronic)9788778824387
Publication statusPublished - 2009

    Research areas

  • Batch productions, Double marginalization, Inventory, Integrated vendor-buyer model, stock-dependent demand

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