An optimal two-level supply chain model for Small- and Medium-sized Enterprises (SMEs) considering rework for new products and price-dependent demands

Z. Jafaripour, S. M. Sajadi*, S. M.Hadji Molana

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

Abstract

With the advent of new technologies, several factors such as globalization of markets, customers' different needs, and increasingly fierce economic competition have encouraged Small- and Medium-sized Enterprises (SMEs) to improve their engagement with suppliers and to involve themselves with cost management practices in order to survive. SMEs clearly need to focus on the interests of the entire supply chain by enacting win-win policies. In this regard, the present study investigated a two-level inventory model featuring a manufacturer and a buyer in the competitive market with the policy of producing new products. The proposed model took into account imperfect and low-quality products and their capacities for rework. In other words, due to the competitive nature of the market, any increase in prices would lead to a decrease in demand. The mathematical model was proposed in two scenarios: one with the possibility of shortage and one without it. The objective function of the mathematical model revolves around maximizing the total profit of the supply chain considering both independent and joint optimization by the supply chain members. A new algorithm was then proposed to solve the mathematical model whose applicability was evaluated by using a numerical example in the analysis software MATLAB as the input. The results were then analyzed and discussed based on a sensitivity analysis approach.

Original languageEnglish
Pages (from-to)1622-1637
JournalScientia Iranica
Volume29
Issue number3E
DOIs
Publication statusPublished - May 2022

Bibliographical note

Copyright © 2022 Sharif University of Technology. This is an open access article under the terms of the Creative Commons Attribution License CC BY [https://creativecommons.org/licenses/by/4.0/]

Keywords

  • Imperfect quality products
  • Inventory management
  • New products
  • Rework
  • Small- and Medium-sized Enterprises (SMEs)
  • Supply Chain Management (SCM)

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