Title: Three-echelon supply chain with centralised and decentralised inventory decisions under linear price dependent demand

Authors: Burra Karuna Kumar; Dega Nagaraju; S. Narayanan

Addresses: Department of Mechanical Engineering, Gudlavalleru Engineering College, Gudlavalleru-521356, Andhra Pradesh, India ' Manufacturing Division, School of Mechanical and Building Sciences (SMBS), VIT University, Vellore-632014, Tamilnadu, India ' School of Mechanical and Building Sciences (SMBS), VIT University, Vellore-632014, Tamilnadu, India

Abstract: In the current global business environment, the competition is between the supply chains, but not among echelons of the chain. Hence, it is highly essential to bring down the cost of the supply chain rather than reducing the costs of individual echelons independently. This work focuses on modelling and optimisation of a coordinated and non-coordinated three-echelon supply chain with the consideration of ordering/setup costs, transportation and carrying costs. The objective of the present work is to demonstrate the optimality of inventory replenishment decisions, shipment frequencies and the annual total relevant costs under linear price dependent demand. Numerical illustration is carried out to find out the optimal values of objective function and decision variables. Also, the parametric analysis is carried out to show the influence of model parameters.

Keywords: supply chain management; SCM; linear price dependent demand; total relevant cost; replenishment decisions; shipment frequency; three-echelon supply chains; centralised inventory decisions; decentralised inventory decisions; inventory modelling; optimisation; coordinated supply chains; non-coordinated supply chains; ordering costs; setup costs; transport costs; carrying costs; inventory management.

DOI: 10.1504/IJLSM.2016.073970

International Journal of Logistics Systems and Management, 2016 Vol.23 No.2, pp.231 - 254

Received: 18 Sep 2014
Accepted: 19 Oct 2014
Published online: 31 Dec 2015 *

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