Coordinating ordering and production polices for JIT: Bargain power analysis

In decentralized-decision making process, the buyer´s EOQ solution was often unacceptable to the supplier, while the supplier ELS solution was undesirable to the buyer. Based on an integrated JIT inventory model, bargain power structures of buyer and supplier were analyzed to yield the JIT policy accepted by both parties. Two typical cases, supplier´s dominance and buyer´s dominance were included into more general quantitative bargain power analysis. Traditional single-order-single-delivery model was extended into JIT single-order-multiple-delivery (SSMD) model. A numerical example was given to show how optimal policies and system costs changed with two parties´ bargain power factor, and made a comparison with the results joint optimal policy.