Joint economic lot-sizing approach to the just-in-time purchasing problem

One of the important concepts of JIT philosophy is the high frequency with small lots in the delivery process. However, this issue is settled between the purchaser and vendor depending on the existing balance of power. The result of such decisions could end with ordering policies, not suitable for JIT logic and place some disadvantages to one of the parties or both. Additionally, these policies have not considered the effect of transportation cost on the optimal ordering and shipment size quantities; despite the fact that purchased materials must bear transportation charges. This paper develops joint economic lot-size model under deterministic conditions, focusing on the shipment size and its effect to the joint total cost, which also includes transportation cost. For that purpose, the joint model is arranged according to the shipment size. Then a computational analysis is made between each parties shipment size policy with the joint model. Consequently, a full factorial design is generated with four factors at three levels. By using the analysis of variance, the effects of the factors on the joint total cost are investigated.