Integrated Strategy For A Deteriorating Item

In 21" century, under the background of economy globalization, market competition is more vehement. More and more enterprise realize that only relying on their own resources is hard to win in the fierce competition, and the competition between enterprises has developed into competition between whole supply chains. The new direction for enterprise management is supply chain management (SCM).Traditionally, the vendor and the buyer are two individual entities with different objectives and self-interest. Due to rising cost, globalization trend, shrinking resources, shorten product life cycles and quicker responsive time, increasing attention has been placed on the integration of the whole supply chain system. An effective supply chain network requires a cooperative relationship between the vendor and the buyer. Based on mutual trust, the cooperation includes the sharing of information, resources and profit. The result of close cooperation is to build a mutual beneficial environment, which will increase the joint profit as well as enable a quicker respond to customer demand. One of the most common strategies is to setup an optimal pricing and ordering policy acceptable to both the vendor and the buyer. Therefore, it is studied that integrated strategy in supply chain on different way.This paper makes emphases on integrated strategy for a deteriorating item. The first body part of the article develops an optimal ordering policy for a deteriorating item with a constant demand rate. It studies mathematical modeling of vendor and buyer with shortage in buyer, and develops the integrated vendor-buyer strategy with losing clients during shortage in buyer. The second body part describes pricing and inventory policy in the supply chain composed of enterprises that sell deteriorating items when demand is price sensitive. It develops two kinds of mathematical modeling in the supply chain composed of single-vendor and multiple-buyers with integrated strategy or without integrated strategy, and gives an optimal pricing and ordering policy with integrated strategy.The article is formed by six parts. The first part gives a illustration of SCM theory. The second part mainly introduces the theory of inventory control. The third part summarizes integrated strategy and the literatures about inventory in recent years. The fourth part sets up mathematical modeling of vendor and buyer with shortage in buyer with a constant demand rate, and develops the integrated vendor-buyer strategy with losing clients during shortage in buyer, and describes it with a new mathematical modeling. The fifth part sets up pricing and...