Research Article Open Access

Analysis of Inventory Coordination in Supply Chain with Price Dependentent in a Stochastic Demand

Abstract

The maximization of profits in the supply chain involves the coordination of key processes in the firm such as order placement, order fulfillment and purchasing which are supported by marketing, finance, engineering, information systems, operations and logistics. This study is on the coordination of three level supply chain networks with a single manufacturer supplying a single product to a single supplier who also supplies a group of retailers in a single consolidated quantity. The objective is to determine the optimal inventory policies for the manufacturer, supplier and retailer that minimize total system cost while meeting customer demand. We focused on modelling and optimization of three level supply chain with price dependent demand for optimal replenishment quantity, inventory ratio and annual total relevant cost with and without coordination. A numerical illustration is carried to observe the behavioural pattern of the decision variables with positive integer. The parametric analysis is carried out to observe the variation in optimal values of the decision variables with respect to variation in manufacturer, supplier and retailer ordering costs and selling prices.

Encho Leo Tanyam*, Okolo Abraham

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