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

Author

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  • Jonas Yu
  • Yu-Siang Lin
  • Kung-Jeng Wang

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.

Suggested Citation

  • Jonas Yu & Yu-Siang Lin & Kung-Jeng Wang, 2013. "Coordination-based inventory management for deteriorating items in a two-echelon supply chain with profit sharing," International Journal of Systems Science, Taylor & Francis Journals, vol. 44(9), pages 1587-1601.
    • Handle: RePEc:taf:tsysxx:v:44:y:2013:i:9:p:1587-1601
    DOI: 10.1080/00207721.2012.659701
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    Citations

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    Cited by:

    1. Janssen, Larissa & Claus, Thorsten & Sauer, Jürgen, 2016. "Literature review of deteriorating inventory models by key topics from 2012 to 2015," International Journal of Production Economics, Elsevier, vol. 182(C), pages 86-112.
    2. Taleizadeh, Ata Allah & Noori-daryan, Mahsa & Cárdenas-Barrón, Leopoldo Eduardo, 2015. "Joint optimization of price, replenishment frequency, replenishment cycle and production rate in vendor managed inventory system with deteriorating items," International Journal of Production Economics, Elsevier, vol. 159(C), pages 285-295.
    3. Mosahar Tarimoradi & M. H. Fazel Zarandi & Hosain Zaman & I. B. Turksan, 2017. "Evolutionary fuzzy intelligent system for multi-objective supply chain network designs: an agent-based optimization state of the art," Journal of Intelligent Manufacturing, Springer, vol. 28(7), pages 1551-1579, October.
    4. Bai, Qingguo & Chen, Mingyuan & Xu, Lei, 2017. "Revenue and promotional cost-sharing contract versus two-part tariff contract in coordinating sustainable supply chain systems with deteriorating items," International Journal of Production Economics, Elsevier, vol. 187(C), pages 85-101.
    5. Hsien-Jen Lin, 2015. "Two-echelon stochastic inventory system with returns and partial backlogging," International Journal of Systems Science, Taylor & Francis Journals, vol. 46(6), pages 966-975, April.
    6. Zhang, Jianxiong & Liu, Guowei & Zhang, Qiao & Bai, Zhenyu, 2015. "Coordinating a supply chain for deteriorating items with a revenue sharing and cooperative investment contract," Omega, Elsevier, vol. 56(C), pages 37-49.
    7. Ma, Xueli & Wang, Jian & Bai, Qingguo & Wang, Shuyun, 2020. "Optimization of a three-echelon cold chain considering freshness-keeping efforts under cap-and-trade regulation in Industry 4.0," International Journal of Production Economics, Elsevier, vol. 220(C).
    8. Kebing Chen & Tiaojun Xiao, 2015. "Production planning and backup sourcing strategy of a buyer-dominant supply chain with random yield and demand," International Journal of Systems Science, Taylor & Francis Journals, vol. 46(15), pages 2799-2817, November.
    9. Ghiami, Yousef & Williams, Terry, 2015. "A two-echelon production-inventory model for deteriorating items with multiple buyers," International Journal of Production Economics, Elsevier, vol. 159(C), pages 233-240.

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