Supply chain inventory model with price-dependent consumption rate with ameliorating and deteriorating items and two levels of storage

Abstract

As the industrial environment becomes more competitive, supply chain management has become essential. The objective of this research is to develop a supply chain inventory model for deteriorating and ameliorating items and to derive an optimal joint total cost from an integrated perspective among the manufacturer and the retailer. Most Manufacturers/retailers make pricing decisions of their products at certain times of the year and these decisions affect demand. The demand rate is assumed to decrease as price for the product increases. In this paper, for excess stock, manufacturer’s has two storage facilities in which one is the own warehouse (OW) and another is a rented warehouse (RW). The manufacturers store goods in OW before RW, but clear the stocks in RW before OW. Holding cost is linear increasing function of time. The model considered both ameliorating and deteriorating effects with two parameter Weibull distribution taking account of multiple deliveries. Shortages are permitted with partial backorder. Model is considered for a finite planning horizon. Numerical experiments together with sensitivity analysis are also illustrated.