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Journal of Optimization
Volume 2013, Article ID 519180, 5 pages
http://dx.doi.org/10.1155/2013/519180
Research Article

Optimizing the Two-Stage Supply Chain Inventory Model with Full Information Sharing and Two Backorders Costs Using Hybrid Geometric-Algebraic Method

Department of Information Systems, King Faisal University, P.O. Box 78, Al-Hufof 31982, Saudi Arabia

Received 27 January 2013; Revised 12 April 2013; Accepted 19 April 2013

Academic Editor: Cedric Yiu

Copyright © 2013 Mohamed E. Seliaman. 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.

Abstract

We consider the case of a two-stage serial supply chain system. This supply chain system involves a single vendor who supplies a single buyer with a single product. The vendor’s production rate is assumed finite. In addition, the demand at the buyer is assumed deterministic. In order to coordinate their replenishment policies and jointly optimize their operational costs, the two supply chain partners fully share their relevant information. For this purpose, we develop an integrated inventory replenishment model assuming linear and fixed backorders costs. Then, we use a hybrid geometric-algebraic method to drive the optimal replenishment policy and the minimum supply chain total cost in a closed form.