A single-manufacturer multi-retailer integrated inventory model for items with imperfect quality, price sensitive demand and planned back orders

Dipak Barman,Gour Chandra Mahata

doi:10.1051/ro/2021156

Abstract

In this paper, we develop an integrated two-echelon supply chain inventory model with a single-manufacturer and multi-retailers in which each retailer’s demand is dependent on selling price of the product. The manufacturer produces a single product and dispatched the order quantities of the retailers in some equal batches. The production process is imperfect and produces imperfect quality of products with a defective percentage which is random in nature and follows binomial distribution. Inspection process is performed by the retailers to classify the defective items in each lot delivered from the manufacturer. The defective items that were found by the retailer will be returned to the manufacturer at the next delivery. Lead time is random and it follows an exponential distribution. We also assume that shortages are allowed and are completely backlogged at each retailer’s end. A closed form solution to maximize the expected average profit for both the centralized and the decentralized scenarios are obtained. The developed models are illustrated with the help of some numerical examples using stochastic search genetic algorithm (GA). It is found that integration of the supply chain players results an impressive increment in the profit of the whole supply chain. Sensitivity analysis is also performed to explore the impacts of key-model parameters on the expected average profit of the supply chain.

Highlights

With the growing fixate on supply chain management over the last two decenniums, firms endeavors to accomplish more preponderant collaborative advantages with their supply chain partners
Keeping in mind the consequentiality of lead time and fixating on multi-retailer scenarios, in our model we develop a single-manufacturer multi-retailer inventory supply chain model postulating lead time as a stochastically arbitrary variable following mundane distribution and the customer demand is influenced by its selling price
Based on the survey above, we develop a single-manufacturer multi-retailer inventory supply chain model assuming lead time as stochastic and the customer demand is influenced by its selling price

Summary

Introduction

With the growing fixate on supply chain management over the last two decenniums, firms endeavors to accomplish more preponderant collaborative advantages with their supply chain partners. There is a tremendous growing interest in jointly optimizing the engenderment and inventory quandaries for the supply chain partners. Integrated inventory management has recently received a great deal of attention. Due to the globalization of the rialto and expeditiously incrementing competition between sundry opposition organizations, companies are facing sundry obstacles to compete exclusively. Collaboration between different business units leads to a consequential way to obtain spirited advantage. The supply chain players are exhibiting great interest in making their decisions jointly. Since 1976 Goyal [15] was the first author

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Discussion

Conclusion