Inventory replenishment planning with a full truckload cost and a full return policy

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Abstract

This paper addresses the single-item uncapacitated lot sizing problem with batch ordering under the buyback contract between a retailer and a supplier. The form of this type of contract consists in returning all the unused products at the end of every w periods (with w ≥ 1) to the supplier. This problem is studied with only full batches (OFB), which means that the procurement in each period is restricted to a multiple of a constant batch size, where each demand is satisfied without backlogging and all cost parameters are time-dependent. In this extension, we consider a stepwise discontinuous procurement cost structure due to the fixed cost per batch replenished, incurred by the retailer, in addition to the classical lot sizing costs. Several properties of the optimal solution are proposed to develop an efficient dynamic programming algorithm performed in time complexity O(Tw).

Keywords

Lot sizing
replenishment planning
buyback contract
stepwise cost
polynomial time algorithm

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