TIME-BASED CONSIDERATION IN CUSTOMER-VENDOR MODELLING

Abstract

Time-based consideration in customer-vendor relationship is studied. We derived the business proportions that a customer would allocate to vendors in explicit recognition of their delivery frequencies and prices charged. We also studied the quotation of both delivery rates and prices of goods from the perspective of the vendor. We provided results· in the context of deterministic demand and delivery I rates. We also examined the effects of stochasticity of vendors' deliveries on the total cost of the system in terms of holding and backorder costs. We found that under different conditions of stochasticity, there can be an optimal choice between a one-vendor supply or a two-vendor supply for the customer. This work contributes to the modelling literature in the realm of what has been mostly qualitative description of time-based competition.