supply chain coordination mechanism with lead-time and prepayment discounts for deteriorating items under budget constraint
Document Type : Original Article
Authors
Department of Industrial Engineering, Faculty of Engineering, College of Farabi, University of Tehran, Iran
Abstract
Coordination is one of the most important functions in supply chain management. deteriorating items are used in many industries and thus they are considered in many inventory control models. Such goods may corrupt, volatilize, and degenerate over time and thus cause the decline of their values or quantity. Therefore determining the order quantity and time order is very important. Also, the members of the SCM usually face budget constraints, and the manufacturer supplies a part of the Liquidity needed by receiving a deposit of the total amount. This study considers a two-stage supply chain consisting of a single wholesaler and a single manufacturer producing deteriorating items. A mechanism for coordination and long-term cooperative relationships is considered. This mechanism consists of two types of discounts, one performed according to time order and the other according to a portion of the prepayment to the total amount. A numerical example is given, and sensitivity analyses are performed. By applying a coordination mechanism and gaining optimum quantity order, time order, and a portion of the prepayment to the total amount, it has been shown that in integrated SCM the total profit has increased to independent SCM.
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