Stackelberg scheme in vendor – buyer inventory model for imperfect quality product with partial backordering

Abstract

In this paper, several new mathematical analysis approaches in probabilistic inventory model which incorporate both imperfect quality items existence and lead-free demands are proposed using non-cooperative games. Considered the monopolistic relationship between vendor and buyer in some real inventory problem, the vendor is set to be a leader who determines the Stackelberg’s optimal move after observing the optimal responses from the buyer as a follower. Optimum condition using Karush – Khun – Tucker conditions is applied with Stackelberg scheme to get optimum value of the system.