Table of Contents
Journal of Industrial Engineering
Volume 2014, Article ID 429836, 11 pages
Research Article

Optimal Pricing and Ordering Policy for Two Echelon Varying Production Inventory System

1Department of Mathematics, Jadavpur University, Kolkata 700032, India
2Department of Mathematics, Bhangar Mahavidyalaya, University of Calcutta, Bhangar, South 24 Parganas, Kolkata 743502, India

Received 8 June 2014; Accepted 5 August 2014; Published 11 September 2014

Academic Editor: Leopoldo Eduardo Cardenas-Barron

Copyright © 2014 Brojeswar Pal et al. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.


The paper proposes a two-stage supply chain model for price sensitive demand in imperfect production system while manufacturer and supplier are the members of the chain. The supplier screens the raw materials first and supplies good materials to the manufacturer at a constant rate. The production rate varies randomly within a finite interval. The inventory cycle of the manufacturer starts with shortages and production and it finishes with shortages again, in which shortages are partially backlogged. We consider a mixture of LIFO (last in, first out) and FIFO (first in, first out) dispatching policies to fill the backlogged demand. Thus, the objective of the proposed paper is to determine the optimal ordering lot-size and selling price of the manufacturer such that the per unit average integrated expected profit of the supply chain model is maximized. A numerical example is provided to analyze and illustrate the behavior and application of the model. Finally, sensitivity analysis of the key parameters are presented to test feasibility of the model.