A Buyer Vendor Coordination Model

Astanti, Ririn Diar and Ai, The Jin (2016) A Buyer Vendor Coordination Model. In: Asia Pacific Industrial Engineering and Management Systems Conference, 7 - 10 December 2016, Taipei, Taiwan.

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Abstract

The research in this paper develops the model for buyer vendor coordination. The developed model is motivated by the real situation of an Original Equipment Manufacturers (OEMs) that supply component automotive industry, repair shop, and automotive dealer (Single Vendor Multiple Buyers) in Indonesia. The fact we got from the case study we observed is that the joint economic lot sizing problem is no longer applicable. This is due to the fact that automotive industry as the buyer operates in Just in Time Environment and has higher bargaining power. Therefore, the OEM has to produce as it is required by the automotive industry. In other side in order fulfill the demand for repair shop and automotive dealer, the vendor do demand consolidation before determining when they have to start production and how many product they have to produce. Based on the case study that we observed, in order for the vendor to meet the target profit, they have to decide about the selling price of the product to be sold for automotive industry, repair shop and automotive dealer. Therefore, the model developed in this paper is trying to answer about the selling price of the product to each type of buyer. Numerical example to show the applicability of the model is shown. In term of managerial implication, the research in this paper can be used by the company as a basis for decision purchasing contract with their buyers.

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