A Replenishment Policy for the Multiple Types of Items with a Minimum Order Size Constraint

In this paper we consider replenishment problem for a single buyer who orders multiple types of items from two or more heterogeneous suppliers with different properties and sells them to end customers. In this system, the buyer periodically orders each item as required order size set by a supplier to meet his inventory control policy. At this time, the supplier requires that the buyer must order each item at least order size and purchase amount requirement with supply contract. Therefore, the buyer must decide how much to buy from each of the suppliers considering the status of current inventory level and forecasted demand and the minimum order size and minimum purchase amount requirement for the upcoming periods. The buyer���s problem is formulated as an integer programming model and a rolling-horizon implementation strategy is suggested for efficient implementation of the model. A computer experiment was performed to test the validity of the model and the efficiency of the implementation strategy. When compared with the most efficient policy currently available, our method yielded a considerable cost reduction