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Application of Normalized Lifetime-Dependent Selling-Price in a Supply Chain Model

  • Muhammad Waqas Iqbal
  • Biswajit Sarkar
Original Paper
  • 25 Downloads

Abstract

Food products’ wholesomeness is affected due to continuous degradative changes with time, resulting in reduced quality and lost sales. The degradation is caused by several factors, which have been frequently studied by the researchers. The modelling and optimization of such supply chain systems, involving real-time effects of deterioration and demand, has been a challenge always. In this context, this research work provides a two-echelon supply chain model for short-lifetime deteriorating products involving a retailer and a manufacturer. The rate of deterioration is considered as a dynamic parameter that increases with time. The rate of product’s demand is considered as a min–max function of its selling-price, which depicts the general behavior of customers. In view of the actual market trends for short-life products, their selling-price is considered as a function of its maximum lifetime. Profit of the supply chain is modelled as a nonlinear function, which is maximized on optimal values of selling-price and cycle-time through analytical optimization techniques. A computational algorithm is proposed to obtain optimal solutions and robustness of the model is verified through numerical experiments. A sensitivity analysis is provided to realize the effects of variation in several system parameters on its profit. Results of the experiments suggest that shorter time spans of replenishment are more appropriate for short-lifetime deteriorating products. Some important managerial insights are provided to support the decision makers while implementing the proposed models in real-world situations.

Keywords

Supply chain system Computational intelligence System modelling and optimization Lifetime-dependent selling-price Deterioration Variable demand 

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Copyright information

© Springer Nature India Private Limited 2018

Authors and Affiliations

  1. 1.Department of Industrial and Management EngineeringHanyang UniversityAnsanSouth Korea

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