Abstract
This paper formulates an integrated inventory model that allows Stackelberg game policy for optimizing joint total cost of a vendor and buyer system. After receiving the lot, the buyer commences an inspection process to determine the defective items. All defective items the buyer sends to vendor during the receiving of the next lot. Due to increasing number of shipments fixed and variable transportation, as well as carbon emissions, are considered, which makes the model sustainable integrated model forever. To reduce the setup cost for the vendor, a discrete setup reduction is considered for maximization more profit. The players of the integrated model are with unequal power (as leader and follower) and the Stackelberg game strategy is utilized to solve this model for obtaining global optimum solution over the finite planning horizon. An illustrative numerical example is given to understand this model clearly.
Highlights
An integrated-production-inventory model defines the vendor-buyer or retailer-customer model
Non-defective item follows a binomial distribution and lead time demand follows a mixture of normal distribution
This paper developed a sustainable integrated inventory model with fixed and variable transportation cost
Summary
An integrated-production-inventory model defines the vendor-buyer or retailer-customer model. In this direction of research, transportation costs along with piecewise constant setup cost are described in Pazhani et al [38] They developed a mixed integer nonlinear programming model to observe the optimal inventory policy for the several stages in supply chain. After a long literature survey, it is found that there is no sustainable integrated inventory model for unequal power of players and where a discrete investment is used to reduce the setup cost, as well as fixed and variable transportation and carbon emission cost are introduced. This proposed research fulfils this existing research gap. We provide the problem definition with notation and assumptions
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