Coordination-based inventory management for deteriorating items in a two-echelon supply chain with profit sharing |
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Authors: | Jonas C.P. Yu Yu-Siang Lin |
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Affiliation: | 1. Logistics Management Department , Takming University of Science and Technology , Taipei 114 , Taiwan;2. Department of Industrial Management , National Taiwan University of Science and Technology , Taipei 106 , Taiwan |
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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. |
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Keywords: | deterioration inventory control profit sharing supply chain management |
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