An Integrated Vendor-Buyer Model with Uncertain Lead Time, Life Time under Inflation and Variable Holding Cost

Abstract

This study considers the problem of a vendor which supplies an item to the buyer with imprecise partial backlogging rate of unsatisfied demand and non instantaneous deterioration rate considering variable holding cost, the effect of inflation and time value of money. The supplier’s lead time is a stochastic function of his managing cost. The extra costs incurred by the retailer due to the uncertain lead time in terms of shortage costs or lost sales costs should be owed by the supplier. A numerical example is cited to illustrate the results and its significant features. Finally, to study the effect of changes of demand parameters, deterioration, inflation and managing cost on supplier and the retailer’s profit, a sensitivity analysis is presented numerically.