Coordination-based inventory management for deteriorating items in a two-echelon supply chain with profit sharing

Jonas Yu, Yu-Siang Lin and Kung-Jeng Wang

International Journal of Systems Science, 2013, vol. 44, issue 9, 1587-1601

Abstract: This study develops a model for inventory management consisting of a two-echelon supply chain (SC) with profit sharing and deteriorating items. The retailer and the supplier act as the leader and follower, in which the supplier faces a huge setup cost and economic order quantity ordering strategy. The market demand is affected by the sale price of the product, and the inventory has a deterioration rate following a Weibull distribution. The retailer executes three profit-sharing mechanisms to motivate the supplier to participate in SC optimisation and to extend the life cycle of the product. A search algorithm is developed to determine the solutions as using the profit-sharing mechanisms. The outcomes from numerical experiments demonstrate the profitability of the proposed model.

Date: 2013
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Citations: View citations in EconPapers (9)

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DOI: 10.1080/00207721.2012.659701

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