Integrated model with imperfect production process under the effect of learning

Abstract

A multi-item production-inventory model for a two-echelon supply chain model is developed in this paper. In supply chain we consider two players one is manufacturer and other is retailer. In the proposed model it is assumed that manufacturing process in not perfect and unit manufacturing cost is the function of production rate. During transportation, due to improper handling lot received by the retailer contains imperfect items. So, to maintain the goodwill in market screening process is carried out at retailer ends. Due to learning phenomenon, percentage of defective items present in each lot follows the learning curve. Partial back ordering is considered at retailer's ends. To increase the demand, supports of promotional activity such as advertisement is taken by the decision maker and cost of advertisement is bear by both the player. Two different approaches, one is integrated approach and other is leader-follower approach optimal solution of the supply chain has been obtained. Proposed model is illustrated with the help of numerical example and sensitivity analysis is carried out with respect to different parameters.