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A well-known and important research contributed by Lee and Wang (Managing level of consigned inventory with buyer's warehouse capacity constraint,  Production Planning and Control , 19(7), 677–685, is revised. Our note indicates incorrectness of the main statement of the theorem that  in the case of the buyer's warehouse space capacity limitation, an optimal CS-policy can be obtained either as a solution of adequate unconstrained problem (if for optimal policy) or as a solution of the auxiliary sharp constrained problem . Numerical counterexample, with appropriate comments, is presented. We also provide a reformulation of the model, and proper conditions for optimal CS-policy.

On the consignment stock of inventories under buyer's warehouse space capacity limitation