Volume 2 Issue 4 pp. 811-818 Fall, 2011


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


B.C. Giri and S. Bardhan
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.


DOI: 10.5267/j.ijiec.2010.06.003

Keywords: Supply chain, Inflation, Time value of money
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