Optimal manufacturing and delivery schedules in a supply chain system of deteriorating items

Abstract

The market is changing from minute to minute nowadays. Increasing cooperation and pursuing of the optimal interest of the integrated supply chain system become more effective than acting alone in the face of competition. In this research, an integrated inventory policy between a single producer and a multi-buyer is developed. The model extends the research of Lin and Lin (2007, A cooperative inventory policy with deteriorating items for a two-echelon model. European Journal of Operational Research, 178 (1), 92–111) by changing the single-buyer system to the multi-buyer system. This problem is solved under the assumptions of equal replenishments and production cycles. The producer and buyers collaboratively intend to decrease their joint total cost of operation. We consider the deterioration of items at all levels of producer, buyer and in-transport, and the backorders at buyer's level only. The algorithm to find the optimal solution is given, and Matlab and Maple software are used. A numerical example is also presented.

Keywords:

• deterioration
• inventory
• shortage
• integrated policy
• joint cost
• minimisation

Acknowledgements

The authors are thankful to the anonymous reviewers for their critical comments and constructive suggestions, the responses to which improved the quality and presentation of the paper significantly.