Journal
EUROPEAN JOURNAL OF OPERATIONAL RESEARCH
Volume 131, Issue 2, Pages 309-323Publisher
ELSEVIER SCIENCE BV
DOI: 10.1016/S0377-2217(99)00445-2
Keywords
purchasing; supply contracts; procurement management; inventory models
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In this paper we address a buyer-supplier arrangement of particular importance: total order quantity commitment (TOQC). Under the TOQC contract that has been negotiated between the buyer and the supplier, the former agrees to an obligation to procure a certain quantity of an item from the latter over the predetermined period of time (additional quantity can be obtained maybe at a different price). The optimal inventory replenishment policy is shown to be dual order-up-to levels under a given TOQC, and the optimal TOQC is also demonstrated to be mathematically straightforward to obtain. (C) 2001 Elsevier Science B.V. All rights reserved.
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