An integrated policy of multi-echelon supply chain with dual source for deteriorating items

Abstract

The different facilities in the supply chain develop their partnership through information sharing and strategic alliances, in order to achieve long-term benefits and global optimum of the system. This study develops a two-supplier three-echelon inventory model that integrates the upper, middle and lower levels of the supply chain. The mathematical model describes how the integrated approach to decision making can achieve global optimum as compared to independent decision by the supplier, the distributor and the retailer. A computer code is developed to derive the optimal solution. Numerical examples and a sensitivity analysis are given to validate the results of the system.

keywords:

• Supply chain
• multi-echelon inventory system
• dual source
• joint total cost