An integrated economic lot-size model for vendor-buyer inventory system when input is random

An integrated strategy is discussed for both vendor and buyer when the inputisrandom. It is shown numerically that the cooperative approach is beneficial to reduce the cost when compared with an independent decision by both the parties. Though the integrated total cost decreases, the buyer's cost increases due to random input in his inventory. To encourage the buyer to order alarge quantity, a trade credit is offered by the vendor to the buyer to settle the account. A conciliation factor is suggested to share the benefits. (C) 2008 Elsevier Ltd. All rights reserved.