Joint Two-Echelon Inventory Model for Optimal Inventory Decisions and Shipment Policies under Non-Linear Price Dependent Demand

In supply chain management, achieving effective coordination among manufacturers and retailers has become a pertinent research issue. Supply chain coordination is a joint decision policy achieved by the manufacturer and a retailer. This work proposes ajoint two-level supply chain model with a singlemanufacturer and a single-retailer. The novelty of the proposed model is that the demand is expressed as non-linear function of the retailer’s unit selling price. Ordering/setup costs, carrying costs and transportation costs are considered in the development of the model. The objective of the model is to demonstrate the optimality of replenishment quantities, shipment frequency and the total relevant 8418 Burra Karuna Kumar et al. costs under non-linear price dependent demand. The model is solved using a computer programme written in MATLAB, as per the optimality criterion derived for the decision variables. Further, the sensitivity analysis is carried out to show the influence of the model parameters.