ABSTRACT. This research presents single-vendor multi-buyers model with unstable
lead time and setup cost and transportation in divergent supply chain. The vendor’s
concern is on crashing of the setup cost, and buyers is on reducing lead time. The
vendor manufactures products and delivers them to the buyers located in different
locations by a fleet of vehicles with identical capacity. The lead time demand is
normally distributed. Excluding transportation time, the lead time component of
buyers can be reduced by adding crashing cost. Lead time demand per unit time on
buyers are normally distributed. The purpose of this research is to formulate an
integrated single-vendor multi-buyers model to determined the optimal solution of
order quantity, safety factor, lead time, shipment frequency and routing decision
which has been illustrated through a numerical example.
Keyword: integrated inventory model, unstable lead time, unstable setup cost,
service level constraint, partial backorder
