A Bernoulli model for the single-vendor single-buyer supply chain

This paper proposes a stochastic model for the single-vendor single-buyer supply system with (s ,S)-inventory policy, where replenishments are made to raise the current inventory position to S whenever it reaches or drops below the reorder point s. Both the supply process on the vendor side and the consumption process on the buyer side are modeled as Bernoulli processes. The model is analytically formulated and the steady state probabilities are found by using a partitioning procedure. Then, the main performance measures which allow a quantitative evaluation of the supply chain as a whole are computed. Finally, some numerical results prove the ability of the model to support the involved parties (vendor, warehouse and buyer) in choosing the main design parameters such as the reorder point s and/or the maximum inventory capacity S.