Optimal strategy for the integrated vendor-buyer inventory model

This note is concerned with the integrated vendor-buyer inventory model. Two different strategies have been proposed in the literature for the problem: one where the delivery quantity to the buyer at each replenishment is identical; and another strategy where at each delivery, all the inventory available with the vendor is supplied to the buyer. We show that there is no one strategy that obtains the best solution for all possible problem parameters. We also present the results of a detailed numerical study that analyses the relative performance of the two strategies for various problem parameters. (C) 1998 Elsevier Science B.V.