An integrated production-inventory model with preservation technology investment for time-varying deteriorating item under time and price sensitive demand

Abstract

This paper deals with a supply chain comprising of single vendor and single buyer who sells single product which is deteriorating in nature. The deterioration is time dependent. The buyer invests funds on preservation technology to preserve the item and reduce deterioration rate in the inventory. The classical optimisation is used to optimise the total profit of the supply chain with respect to selling price, cycle time and investment for preservation technology. The manufacturer production process is not perfectly trustworthy; it may shift from an in control state to an out of control state at any random time during a production run and made some imperfect items. The vendor follows lot for lot policy for refill produced to the buyer. The model is supported with numerical examples and also established a scenario of the model. Sensitivity analysis is done to deduce managerial insights.