Developing a joint sustainable pricing, EOQ and EPQ model for a two-echelon supply chain considering economic, environmental and social issues

In this paper, we studied a joint sustainable lot-sizing/ pricing problem in a two echelon supply chain consists of a retailer and a supplier. For each member of the supply chain, Mathematical profit function containing revenue function and different cost functions based on different factors of sustainability such as economic, environmental and social parameters is formulated and for each member of the chain, optimal lot-sizing (Sustainable EOQ or Sustainable EPQ) and pricing decisions are made. Also, a new procedure for problem solving is presented. The contribution of this paper is integrating sustainable pricing and lot-sizing decisions of a supply chain in one model considering all main pillars of sustainability. We conducted a numerical example based on the real data of an Iranian petrochemical two-echelon supply chain and for better analyzing of numerical example results we performed a sensitivity analysis on production capacity of the supplier and profit margin of the retailer. The results show that in this case the decision variables values are not sensitive to production capacity, but they are so sensitive to profit margin of the retailer.