Two-echelon Supply Chain Model for Deteriorating Items in an Imperfect Production System with Advertisement and Stock Dependent Demand under Trade Credit

This article presents a two-echelon supply chain model for deteriorating items, consisting of a single manufacturer and a single retailer, where the customer's demand to the retailer depends on advertisement and the displayed stock level of the retailer. Due to the imperfect production system, the manufacturer produces a certain quantity of imperfect items with the perfect items. The manufacturer inspects all the products immediately after production and sells the perfect quality items to the retailer. To entice the retailer to purchase more products from him, the manufacturer offers the retailer a trade-credit policy so that the retailer can get a chance to settle his account before the payment for the products. Finally, a cost function of this model has been derived. Numerical examples have been presented to clarify the applicability of this model and sensitivity analysis with respect to the different parameters involved with the model has been presented to study the effect of change of the parameters on the decision variables.