A two-echelon deteriorating production-inventory newsboy model with imperfect production process

Abstract

This paper discusses a two-echelon distribution-free deteriorating production-inventory newsboy model. Distinct from previous models, this study considers a deteriorating commodity with the imperfect production process. The model also considers JIT (Just In Time) deliveries and integrates the marketing and manufacturing channels. This model can be used to solve the production and replenishment problem for the manufacturer and the retailer. We derive the optimal production size, the wholesale price and the optimal number of deliveries. The model takes an insight to the defect-rate reduction. We find an upper bound for the optimal number of material's JIT deliveries. The necessary and sufficient conditions are explored to gain managerial insights and economic implications. © Springer-Verlag Berlin Heidelberg 2006.