Title: A production-inventory model in vendor managed inventory system with deteriorating items and pricing in fuzzy environment

Authors: Masoud Mohammadzadeh; Abolfazl Mirzazadeh

Addresses: Department of Industrial Engineering, Faculty of Engineering, Kharazmi University, 15719-14911, Tehran, Iran ' Department of Industrial Engineering, Faculty of Engineering, Kharazmi University, 15719-14911, Tehran, Iran

Abstract: In this paper, we develop a vendor managed inventory system for a supply chain with two levels. First level is one manufacturer and second level is several non-competing retailers. The manufacturer produces a deteriorating product from a deteriorating raw material. All deteriorating rates assumed as fuzzy numbers. The demands in retailers are price sensitive based on predefined function with fuzzy parameters. The manufacturer can produce products at a variable production rate that is one of the decision variables of our model. Other decision variables are retail price, the replenishment frequency of raw material, the replenishment cycle of the product that obtained by maximising the total profit of the entire chain. Because of concavity of the profit functions, with a solution algorithm, the exact optimal solution was found. At the end, a numerical example is presented to illustrate the model performance with a sensitivity analysis. Finally, some conclusions and future research directions are proposed.

Keywords: vendor managed inventory; VMI; pricing; production rate; fuzzy deteriorating rate; nonlinear optimisation.

DOI: 10.1504/IJLSM.2018.089789

International Journal of Logistics Systems and Management, 2018 Vol.29 No.3, pp.296 - 326

Received: 14 Jan 2016
Accepted: 22 Aug 2016

Published online: 16 Jan 2018 *

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