Optimal cycle time and inventory decisions in coordinated and non-coordinated two-echelon inventory system under inflation and time value of money. Issue 9 (2nd May 2016)

• Record Type: Journal Article
• Authors: Nagaraju, Dega; Ramakrishna Rao, A.; Narayanan, S.; Pandian, P.
• Is Part Of: International journal of production research. Volume 54:Issue 9(2016)
• Page Start: 2709
• Page End: 2730
• Publication Date: 2016-05-02
• Subjects: increased inflation rate -- decreased inflation rate -- supply chain -- net revenue -- present value; Factory management -- Periodicals; 658.57
• DOI: 10.1080/00207543.2015.1126679
• Languages: English
• ISSNs: 0020-7543

Abstract

Abstract : In this paper, a mathematical model is developed for a coordinated and non-coordinated two-echelon inventory system comprising of a single manufacturer and a single retailer. The objective of the model is to demonstrate the optimality of cycle time and inventory decisions under the phenomena of different inflation rates at the manufacturer and retailer points. Also, it is aimed at determining the annual net revenue of the supply chain (SC). In the proposed model, the present value of the inflated ordering/set-up costs, purchase/unit costs, carrying costs and the gross revenue is computed for the retailer, manufacturer and the SC. A numerical example is devised to illustrate the optimality of decision variables and the objective function. Also, the sensitivity analysis is carried out. Results show that the present value of the annual net revenue of the retailer, manufacturer and SC decreases with increased inflation rate at the retailer and decreased inflation rate at the manufacturer simultaneously.