<![CDATA[The supply chain is the main factor influencing the production process in achieving goals. This research develops a model to determine the optimal production lot size in the supply chain system between vendors and buyers by considering the inventory shortage at the buyer. Minimizing the combined inventory cost is the goal of optimizing the production lot size by developing an integration model to determine the optimal lot size. The proposed model uses a periodic delivery method from the vendor to the buyer and allows for inventory shortages at the buyer. An iterative algorithm is applied to find the optimal lot size and minimum integrated inventory cost. The results showed that the initial model with n=1 resulted in a total cost of 2252 and an optimal production size (Q*) of 457. The proposed model reduces the total cost to 1605 with an optimal production size (Q*) of 737. Sensitivity analysis showed that an increase in the frequency of deliveries to vendors and vendor set-up costs contributed to a rise in total cost, while an increase in vendor storage costs led to a decrease in production lot size. This research can improve the efficiency of production planning and inventory management in the supply chain.Keywords - Inventory, Shortages, Single Buyer, Single Vendor.]]>
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