Analysis of supply contracts with minimum total order quantity commitments and non-stationary demands

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Original languageEnglish
Pages (from-to)309-323
Journal / PublicationEuropean Journal of Operational Research
Issue number2
Publication statusPublished - 1 Jun 2001
Externally publishedYes


In this paper we address a buyer-supplier arrangement of particular importance: total order quantity commitment (TOQC). Under the TOQC contract that has been negotiated between the buyer and the supplier, the former agrees to an obligation to procure a certain quantity of an item from the latter over the predetermined period of time (additional quantity can be obtained maybe at a different price). The optimal inventory replenishment policy is shown to be dual order-up-to levels under a given TOQC, and the optimal TOQC is also demonstrated to be mathematically straightforward to obtain. © 2001 Elsevier Science B.V.

Research Area(s)

  • Inventory models, Procurement management, Purchasing, Supply contracts