Multistage supply chain production-inventory model with collaborative preservation technology investment

Abstract. This paper investigates a multistage production-inventory model for de-teriorating items, including raw materials and nished goods, based on collaborative preservation technology investment. The major purpose is to determine the optimal materials supply, production delivery, replenishment, and investment policies for the retailer and manufacturer in which the joint total prot of the integrated system is maximized. Mathematical programming analysis is employed to ascertain the optimal solutions for the retailer and manufacturer. Furthermore, several numerical examples are presented to demonstrate solution process and verify the concavity of the proposed model. Sensitivity analyses with respect to major parameters are also performed. The numerical results show that market demand, xed shipping cost, production rate, manufacturer's sales price, and holding cost of nished good may affect the optimal number of shipments. In addition, when collaborative preservation technology investment becomes an option, the effect of the deterioration rate on the shipping and ordering quantity will be reduced through investment in improving deterioration of raw material or nished good. Finally, the increase in the amount of raw materials used to produce a nished product implies that the amount of nished goods produced by the original material is reduced; therefore, the collaborative preservation technology investment is increased.