Abstract
The paper considers a two-echelon supply chain inventory model with one manufacturer and multiple buyers in which each buyer’s demand is dependent on the selling price of the product. The manufacturer’s lead time is composed of several components and each component can be reduced by an additional crashing cost. We develop the proposed model assuming that the lead time demand follows a normal distribution or it is distribution free. The optimal decisions are obtained by maximizing the total expected profit of the supply chain. It is observed from numerical study that the lead time reduction has minor effect on the selling price of the product, but it enhances the profit of the supply chain system.
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