Joint Optimal Lot Size Policy for a JIT Supply Chain

This paper explored the coordination problem in a JIT supply chain, analyzed two kinds of supply mechanism: buyer's order size is equal to supplier's production lot size and both are an integer multiple of the shipment size, setup cost is constant; buyer's order size is not equal to supplier's production lot size but both are an integer multiple of the shipment size and setup cost is not constant. We compared between dominant party optimal shipment policy with supply chain joint optimal shipment policy. A conclusion is drawn that the best strategy lies in the cooperative game and sharing of benefits between partners and the joint optimal supply mechanism brings about more supply chain savings.