The different facilities in a supply chain usually develop their partnership through information sharing and strategic alliances to achieve the overall benefit of the system. In this study, we propose a supply chain network system with two producers, a single distributor and two retailers. Each retailer has a deterministic demand rate. A mathematical model of deteriorating item is developed to consider a vertical integration of the producer, the distributor and the retailer and a horizontal integration of the producers. We show how the integrated approach to decision making can achieve global optimum. Numerical examples and a sensitivity analysis are given to validate the proposed system.
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