A coordinated vendor–buyer system considering loss and damage claims, insurance cost and stochastic lead time

Ivan Darma Wangsa, Hui Ming Wee () and Shih-Hsien Tseng
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Ivan Darma Wangsa: Chung Yuan Christian University
Hui Ming Wee: Chung Yuan Christian University
Shih-Hsien Tseng: Chung Yuan Christian University

International Journal of System Assurance Engineering and Management, 2019, vol. 10, issue 3, No 7, 384-398

Abstract: Abstract The loss and damage of goods during shipment is a very common risk that business owners often incur as a part of daily operations. For this reason, the shipper may have to make a claim for lost or damaged items. In this study, a claim policy to improve the flow and coordination of the vendor–buyer inventory shipment process is developed. The model assumes some of the goods are lost or damaged during production and shipment. The buyer incurs an insurance cost which corresponds the market value of the item. The stochastic lead time is a function of production, transportation, in-transit and delay times. The objective of the coordinated vendor–buyer model is to minimize the total cost for both parties. An algorithm to optimize the independent and coordinated policies is created. Finally, numerical examples and sensitivity analysis are given to illustrate the theory.

Keywords: Coordinated vendor–buyer; Loss and damage claims; Insurance cost; Stochastic lead time (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (2)

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DOI: 10.1007/s13198-019-00792-y

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