Effect of Learning on Optimal Policies of Supply Chain Partners for Imperfect Quality Items: Game Theoretic Approach

Abstract

Learning curve is a powerful promotion tool for management concern with conniving and monitoring the process of imperfect production, uncontrolled accounts management and quality management. It analyzes the experience of the work force for the given new assignment as well as it is a mathematical representation of the same learning procedure which can be frequently examined. The present paper develops a supply chain model with defective quality items subject to learn effect. In this paper, it is assumed that end demand is sensitive to price and promotion expenses cost. It is also presumed that received lots are not of good (perfect) quality.100% inspection or screening is required to separate imperfect quality. These items are then sold at discounted price. Supply chain models are developed to endorse the interaction between the players in the supply chain, the seller and buyer, shown by non-cooperative game theoretical approaches. Optimal solution are obtained by these game theoretic approach (Seller-Stackelberg model and Buyer-Stackelberg). Learning impact has a great effect on the calculation of gain or loss of the supply chain. In the last, numerical illustrations with sensitivity analysis are presented to support the theory of this paper.