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

Document Type : Article

Authors

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

Abstract

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.

Keywords

References

References:
1. Goyal, S.K. "An integrated inventory model for a single supplier-single customer problem", Int. J. Prod. Res., 15(1), pp. 107-111 (1976).
2. Banerjee, A. "A joint economic-lot-size model for purchaser and vendor", Decision. Sci., 17(3), pp. 292- 311 (1986).
3. Goyal, S.K. "A joint economic-lot-size model for purchaser and vendor: a comment", Decision. Sci., 19(1), pp. 236-241 (1988).
4. Lu, L. "A one-vendor multi-buyer integrated inventory model", Eur. J. Oper. Res., 81(2), pp. 312-323 (1995).
5. Goyal, S.K. "A one-vendor multi-buyer integrated inventory model: a comment", Eur. J. Oper. Res., 82(1), pp. 209-210 (1995).
6. Hill, R.M. "The single-vendor single-buyer integrated production-inventory model with a generalized policy", Eur. J. Oper. Res., 97(3), pp. 493-499 (1997).
7. Goyal, S.K. and Nebebe, F. "Determination of economic production-shipment policy for a single-vendorsingle- buyer system", Eur. J. Oper. Res., 121(1), pp. 175-178 (2000).
8. Kelle, P., Al-khateeb, F., and Miller, P.A. "Partnership and negotiation support by joint optimal ordering/ setup policies for JIT", Int. J. Prod. Econ., 81-82, pp. 431-441 (2003).
9. Giri, B.C. and Roy, B. "A vendor-buyer integrated production-inventory model with quantity discount and unequal sized shipments", Int. J. Prod. Res. , 16(1), pp. 1-13 (2013).
10. Sana, S.S. "A production-inventory model in an imperfect production process", Eur. J. Oper. Res., 200(2), pp. 451-464 (2010).
11. Wu, O.Q. and Chen, H. "Optimal control and equilibrium behavior of production-inventory systems", Manag. Sci., 56(8), pp. 1362-1379 (2010).
12. Lin, Y.J. and Ho, C.H. "Integrated inventory model with quantity discount and price-sensitive demand",  TOP, 19(1), pp. 177-188 (2011).
13. Ouyang, L.Y., Ho, C.H., Su, C.H., et al. "An integrated inventory model with capacity constraint and order-size dependent trade credit", Comput. Ind. Eng., 84, pp. 133-143 (2015).
14. Muniappan, P., Uthayakumar, R., and Ganesh, S. "A production inventory model for vendor-buyer coordination with quantity discount, backordering and rework for fixed life time products", J. Int. Prod. Econ., 33(6), pp. 355-362 (2016).
15. Bhunia, A.K. Shaikh, A.A., and Cardenas-Barron, L.E. "A partially integrated production-inventory model with interval valued inventory costs, variable demand and  exible reliability", Appl. Soft Comput., 55, pp. 491-502 (2017).
16. Teimoury, E. and Kazemi, S.M.M. "An integrated pricing and inventory model for deteriorating products in a two stage supply chain under replacement and shortage", Sci. Iran., 24(1), pp. 342-354 (2017).
17. Beck, A., Bilby, C., and Chapman, P. "Shrinkage in Europe: Stock loss in the fast-moving consumer goods sector", Secur. J., 15, pp. 25-39 (2002).
18. Ferguson, M.E., Lystad, E.D., and Alexopoulos, C. "Single stage heuristic for perishable inventory control in two-echelon supply chains", Unpublished Ph.D. Dissertation, Georgia Institute of Technology, USA (2006).
19. The Profit Experts, The 2011 Retail Profit Protection Report, (http://www.prlog.org/11378377-the- 2011-retail-profit-protection-repo rt.html) (2011).
20. Ghare, P.M. and Scharder, G.P. "A model for an exponentially decaying inventory", J. Ind. Engineering, 14(5), pp. 238-243 (1963).
21. Shen, Y.J., Shen, K.F., and Yang, C.T. "A production inventory model for deteriorating items with collaborative preservation technology investment under carbon tax", Sustainability, 11(18), p. 5027 (2019).
22. Hsu, P., Wee, H., and Teng, H. "Preservation technology investment for deteriorating inventory", Int. J. Prod. Econ., 124(2), pp. 388-394 (2010).
23. Dye, C.Y. and Hsieh, T.P. "An optimal replenishment policy for deteriorating items with effective investment in preservation technology", Eur. J. Oper. Res., 218(1), pp. 106-112 (2012).
24. Dye, C.Y. "The effect of preservation technology investment on a non-instantaneous deteriorating inventory model", Omega, 41(5), pp. 872-880 (2013).
25. He, Y. and Huang, H. "Optimizing inventory and pricing policy for seasonal deteriorating products with preservation technology investment", J. Ind. Engineering, 2013, pp. 1-7 (2013).
26. Zhang, J., Bai, Z., and Tang, W. "Optimal pricing policy for deteriorating items with preservation technology investment", J. Ind. Manag. Optim., 10(4), p. 1261 (2014).
27. Mishra, U., Cardenas-Barron, L.E., Tiwari, S., et al. "An inventory model under price and stock dependent demand for controllable deterioration rate with short ages and preservation technology investment", Ann. Oper. Res., 254(1), pp. 165-190 (2017).
28. Mishra, U., Tijerina-Aguilera, J., Tiwari, S., et al. "Retailer's joint ordering, pricing and preservation technology investment policies for a deteriorating item under permissible delay in payments", Math. Probl. Eng., 2018, Article ID 6962417, 14 pages (2018).
29. Singh, S.R. and Sharm, S. "A global optimizing policy for decaying items with ramp-type demand rate under two-level trade credit financing taking account of preservation technology", Advances in Decision Sciences, 2013, pp. 1-12 (2013).
30. Shah, N.H., Shah, D.B., and Patel, D.G. "Optimal preservation technology investment, retail price and ordering policies for deteriorating items under trended demand and two level trade credit financing", J. Math. Modelling Algorithms Oper. Res., 14(1), pp. 1-12 (2015).
31. Yang C.T., Dye, C.Y., and Ding, J.F. "Optimal dynamic trade credit and preservation technology allocation for a deteriorating inventory model", Comput. Ind. Eng., 87, pp. 356-369 (2015).
32. Singh, S.R. and Rathore, H. "A two warehouse inventory model with preservation technology investment and partial backlogging", Sci. Iran., 23(4), pp. 1952- 1958 (2016).
33. Tsao, Y.C. "Joint location, inventory, and preservation decisions for non-instantaneous deterioration items under delay in payments", Int. J. Syst. Sci., 47(3), pp. 572-585 (2016).
34. Bardhan, S., Pal, H., and Giri, B.C. "Optimal replenishment policy and preservation technology investment for a non-instantaneous deteriorating item with stockdependent demand", Oper. Res., 19, pp. 347-368 (2019).
35. Rust, R.T., Zahorik, A.J., and Keiningham, T.L. "Return on quality (ROQ): Making service quality financially accountable", J. Mark., 59(2), pp. 58-70 (1995).
36. Rosenblatt, M.J. and Lee, H.L. "Economic production cycles with imperfect production processes", IIE Trans., 18(1), pp. 48-55 (1986).
37. Kim, C.H. and Hong, Y. "An optimal production run length in deteriorating production processes", Int. J. Prod. Econ., 58(2), pp. 183-189 (1999).
38. Salameh, M.K. and Jaber, M.Y. "Economic production quantity model for items with imperfect quality", Int. J. Prod. Econ., 64(1-3), pp. 59-64 (2000).
39. Nobil, A.H., Cardenas-Barron, L.E., and Nobil, E. "Optimal and simple algorithms to solve integrated procurement-production-inventory problem without/with shortage", RAIRO-Oper. Res., 52(3), pp. 755-778 (2018).
40. Sana, S.S. "A production-inventory model of imperfect quality products in a three-layer supply chain", Decis. Support Syst., 50(2), pp. 539-547 (2011).
41. Trevino-Garza, G., Castillo-Villar, K.K., and Cardenas-Barron, L.E. "Joint determination of the lot size and number of shipments for a family of integrated vendor-buyer systems considering defective products", Int. J. Syst. Sci., 46(9), pp. 1705-1716 (2015).
42. Hsu, L.F. and Hsu, J.T. "Economic production quantity (EPQ) models under an imperfect production process with shortages backordered", Int. J. Syst. Sci., 47(4), pp. 852-867 (2016).
43. Jaggi, C.K., Cardenas-Barron, L.E., Tiwari, S., et al. "Two-warehouse inventory model for deteriorating items with imperfect quality under the conditions of permissible delay in payments", Sci. Iran., 24(1), p. 390 (2017).
44. Kang, C.W., Ullah, M., and Sarkar, B. "Optimum ordering policy for an imperfect single-stage manufacturing system with safety stock and planned backorder", Int. J. Adv. Manuf. Tech., 95(1-4), pp. 109-120 (2018).
45. Jain, S., Tiwari, S., Cardenas-Barron, L.E., et al. "A fuzzy imperfect production and repair inventory model with time dependent demand, production and repair rates under inflationary conditions", RAIRO- Oper. Res., 52(1), pp. 217-239 (2018).
46. Yang, C.T., Huang, C.H., and Ouyang, L.Y. "Optimal production and ordering strategies with defective items and allowable shortage under two-part trade credit", Sci. Iran., 26(1), pp. 503-521 (2019).
47. Lu, C.J., Yang, C.T., and Yen, H.F. "Stackelberg game approach for sustainable production-inventory model with collaborative investment in technology for reducing carbon emissions", J. Clean. Prod., 270, p. 121963 (2020).
Scientia Iranica
Volume 29, Issue 4
Transactions on Industrial Engineering (E)
July and August 2022
Pages 2099-2114

Files

Share

How to cite

Statistics