This paper addresses a single item two-level supply chain inventory model considering deterioration during carrying of deteriorating item from a supplier’s warehouse to a retailer’s warehouse as well as deterioration in the retailer’s warehouse. The model assumes preservation technology in the retailer’s warehouse to prevent the rate of deterioration. An upper limit for the preservation technology investment has been set as a constraint to the model. The model maximizes the retailer’s profit per unit time, simultaneously calculated optimal order quantity, optimal value of replenishment, optimal selling price. A price dependent demand and storage-time dependent holding cost is considered to develop the model. Some theorems are proven to get optimal values of the total cost. A numerical problem is workout as per the developed algorithm and with the help of MATLAB software to study the applicability of our theoretical results.

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