Packaging Unit Quantity Optimization

Abstract

The level of cooperation between suppliers and manufacturer has serious effect on cost price of the final product. Several factors - like the packaging type of supply materials, the packaging unit quantity, the schedule of shipments, etc.– depend on the flexibility of vendors. However vendor attitude depends on the relationship between business partners. This paper discusses the case when the manufacturer has the possibility to request the vendor to define packaging unit quantity according to its own claim without rise in prices; changing packaging unit quantity may cause significant decrease of additional production costs. To determine optimal quantity on packaging units the following logistic trade-off should be solved: on the one hand extra material handling cost may emerge; on the other hand inventory keeping cost may grow.