On the optimality of inventory and shipment policies in a two-level supply chain under quadratic price dependent demand

摘要

In this paper, a two-level supply chain consisting of a single-manufacturer supplying a single kind of product to a single-retailer is considered. A mathematical model is developed for both the centralised and de-centralised supply chain. The novel idea of the proposed model is that the demand is expressed as a quadratic function of the retailer's unit selling price. Ordering/setup costs, carrying costs and transportation costs are considered for model development. Replenishment quantity at the retailer and shipment frequency from manufacturer to retailer are considered as the decision variables. The objective of the proposed model is to demonstrate the optimality of total variable costs of the respective retailer, manufacturer and the supply chain under quadratic price dependent demand. Computer program is written in MATLAB and the model is solved with the help of a case study data. Further, the sensitivity analysis is carried out and finally, managerial implications are derived.