Coordinating a two-echelon supply chain under inflation and time value of money

• Main Authors: B.C. Giri, S. Bardhan
• Format: Article
• Language: English
• Published: Growing Science 2011-10-01
• Series: International Journal of Industrial Engineering Computations
• Subjects: Supply chain; Inflation; Time value of money
• Online Access: http://www.growingscience.com/ijiec/Vol2/IJIEC_2011_30.pdf

In the current global economic scenario, inflation plays a vital role in deciding optimal pricing of goods in any business entity. This paper develops a two-echelon (manufacturer-buyer) supply chain model taking into account inflation and time value of money. The present value of the total cost of the supply chain is derived when the manufacturer produces a number of lots, the sum of which is equal to the buyer’s total demand over a time horizon and the manufacturer’s each production lot is delivered to the buyer in n shipments. The optimal solution of the model is obtained for a numerical example after some adjustments (required to exhibit feasibility) in the derived solution. Sensitivity analysis is also carried out in order to examine the effects of changes in model-parameters on the optimal solution.