Three-layered integrated inventory model for deteriorating items with quadratic demand and two-level trade credit financing

Abstract

ABSTRACTIn this study, the three-layered integrated production – inventory model – is formulated in which a distributor and a retailer observe quadratic demand and a manufacturer runs the production proportional to the quadratic demand. The inventory of every player is subject to deterioration at a constant rate. The model considers two-level trade credit financing. The total cost of the integrated inventory system is minimised with respect to a number of shipments from the manufacturer to the distributor and the distributor to the retailer and each player's replenishment times. A solution procedure is worked out to obtain the best possible decision for the players of the supply chain. The results are validated with numerical examples for different scenarios. Managerial decisions are suggested.