Abstract
Optimal selling price, replenishment lot size and number of shipments for two-echelon supply chain model with deteriorating items
Highlights
Integrated or coordinated production–distribution decision has been known to be crucial in supply chain management
We developed an integrated single-manufacturer, single-retailer pricing and inventory model for a deteriorating item
The results showed that, when the deterioration rate increased, both the optimal production lot size and cycle time decreased, which was not unexpected, because when the deterioration rate increased, the corresponding cycle time and the production lot size were reduced for the benefit of the entire supply chain
Summary
Integrated or coordinated production–distribution decision has been known to be crucial in supply chain management. Jia and Hu (2011) investigated the joint problem of pricing and ordering for a perishable product in supply chain with one supplier and one retailer in a finite horizon They proved that the optimal pricing strategy for the non-fresh product depends only on its inventory. Taleizadeh et al (2014) developed an inventory model for a two-level supply chain comprised of one vendor and several non-competing retailers in which both the raw material and the finished product had different deterioration rates They assumed that the market demand for the finished product was deterministic and price sensitive. The proposed inventory model optimized the retail price, the replenishment frequency of raw material, the replenishment cycle of the product, and the production rate jointly with main objective of maximizing the total profit of the entire chain.
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