Joint economic lot sizing at two levels of supply chain in food and beverage industry

Abstract

Order lot sizing is one of the important mechanisms that must be used by a supply chain to survive in today's business competition, especially in food beverage industries with reviews of their wide market coverage. And the problem is that generally the order lot size between manufacturers and distributors has not been integrated yet. This study discussed how to get their lot size using the Joint Economic Lot Size (JELS) for two levels of supply chains in order to reduce total costs. Using the JELS coordination model algorithm, the total cost of integration is Rp 58,271,000- with a savings of Rp 15,519,000, where the greatest value of savings occurs to the manufacturer, in the amount of Rp 14,991,000. The result shows that using the JELS mechanism, 60.81% cost saving in manufacturer and 21.03% cost saving in all levels could be Obtained.