Coordination of pricing, inventory, and production reliability decisions in deteriorating product supply chains

Huang, Hongfu, He, Yong and Li, D ORCID: 0000-0002-5884-2943 (2018) Coordination of pricing, inventory, and production reliability decisions in deteriorating product supply chains. International Journal of Production Research, 56 (18). pp. 6201-6224.

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Abstract

In this article, we study a two-level supply chain model for deteriorating items, in which the supplier’s production system is unreliable and the retailer’s demand is price-sensitive. The supplier’s production line may randomly shift from the in-control state to the out-of-control state. When the production line is in the out-of-control state, a proportion of the produced products will have bad quality. To mitigate the out-of-control risks, the supplier can improve the production line reliability by investing in high-quality machines, highly skilled workers, or advanced maintenance technologies. We start with the study of pricing and inventory problems concerning endogenous reliability in the integrated and decentralised scenario. To better illustrate the proposed models, two applicable algorithms are designed to determine the optimal production reliability, ordering quantity, and prices. Then, a cooperative reliability investment and revenue-sharing contract is proposed to coordinate the supply chain. Numerical examples and sensitivity analysis of the equilibrium strategies and coordinating results on key system parameters (e.g. deterioration rate, production rate, etc.) are given to verify the effectiveness of the contract, and meanwhile get some managerial insights.

Item Type:	Article
Uncontrolled Keywords:	deteriorating items, unreliable production, price, inventory, supply chain coordination
Depositing User:	Symplectic Admin
Date Deposited:	30 Jul 2018 15:48
Last Modified:	19 Jan 2023 01:29
DOI:	10.1080/00207543.2018.1480070
Related URLs:	Author Publisher
URI:	https://livrepository.liverpool.ac.uk/id/eprint/3024373

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• Coordination of pricing, inventory, and production reliability decisions in deteriorating product supply chains. (deposited 25 Jul 2018 10:58)
  • Coordination of pricing, inventory, and production reliability decisions in deteriorating product supply chains. (deposited 30 Jul 2018 15:48) [Currently Displayed]