Supply Chain Management For Deteriorating Items With Preservation Technology Investment In Consideration

Deteriorating items were characterized by the quality being not easy to main-tain, the value falling quickly, and so on. And the customers’ requirements aboutthe diversity and fresh of the deteriorating items were higher and higher. Thesemade the enterprise undertake more risks in the process of production, stor-age and operation comparing to other normal products, so it was important tomanage it in the supply chain. However, the researches about the deterioratingitems, at home and abroad, were based that the deterioration rates were constant,uncontrolled. Thus, it’s of considerable realistic significance to consider that in-vesting in preservation technology to control the deterioration rate in enterpriseand supply chain management.Firstly, this thesis considered the problem of simultaneously determiningthe price and inventory control strategies for deteriorating items. It is assumedthat the rate of deterioration can be reduced by means of efective preservationtechnology investment and the demand rate is a function of selling price. Thegoal of this study is to maximize the total profit per unit time by simultaneouslydetermining the optimal selling price, length of replenishment cycle and preser-vation technology investment. Some important conditions for the existence anduniqueness of the optimal solutions are also derived.Secondly, to study the efect of preservation technology investment on production-inventory strategies under the supply chain, a two-echelon supply chain with onemanufacturer and one retailer for one single deteriorating item was constructed.The manufacturer and the retailer shared one warehouse, and jointly investedon preservation technology to reduce the rate of deterioration of products. Themarket demand was assumed to be dependent on the selling price. Firstly, thecentralized and decentralized of pricing and investment decision-making modelswere developed respectively, while the Stackelberg game approach was employedto formulate the structure of the decentralized model. Then, efective algorithmswere designed to find the optimal strategies under diferent scenarios. Thirdly, we constructed a two-echelon supply chain with one manufacturerand some retailers for one single deteriorating item. The manufacturer and theretailers shared one warehouse, and jointly invested on preservation technologyto reduce the rate of deterioration of products.