Multistage supply chain production-inventory model with collaborative preservation technology investment

Document Type : Article


1 - School of Medical Informatics, Chung-Shan Medical University, Taichung 40201, Taiwan. - IT Office, Chung Shan Medical University Hospital, Taichung 40201, Taiwan.

2 - Graduate Institute of Business Administration, Fu Jen Catholic University 242062, Taiwan. - International Business School, Beijing Foreign Studies University, China.

3 Department of International Business Management, Chien Hsin University of Science and Technology, Taoyuan 320312, Taiwan


This paper investigates a multistage production–inventory model for deteriorating items, including raw materials and finished goods, based on collaborative preservation technology investment, hitherto not treated in the previous researches. The major purpose is to determine the optimal materials supply, production delivery, replenishment and investment policies for maximizing the joint total profit of the integrated system. Considering the proposed model, this paper uses mathematical programming analysis to ascertain the optimal solutions. Furthermore, several numerical examples are presented to demonstrate the solution process and verify the concavity of the proposed model. Sensitivity analyses with respect to major parameters are also performed. The numerical results shows that market demand, fixed shipping cost, production rate, manufacturer’s sales price and holding cost of finished goods may affect the optimal number of shipments. Besides, when collaborative preservation technology investment becomes an option, whether the effect of the deterioration rate of raw materials or finished goods on the shipping and ordering quantity will be reduced by preservation technology investment. Finally, the increase in the amount of raw materials used to produce a finished product implies the amount of finished goods produced by the original material quantity is reduced, so the preservation technology investment will be increased.


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