Pricing and inventory decision in a two-layer supply chain under the Weibull distribution product deterioration: an application of NSGA-II

¹ SQC and OR Unit, Indian Statistical Institute, Kolkata 700108, India
² Department of Mathematics, Indian Institute of Technology Kharagpur, Kharagpur 721302, India
³ Strategic Management, Indian Institute of Management Raipur, Atal Nagar, Kurru (Abhanpur), Raipur 493 661, India
⁴ Department of Mathematics, National Institute of Technology Silchar, Silchar, Assam 788010, India

^* Corresponding author: abhijitmath93@gmail.com

Received: 3 January 2023
Accepted: 16 July 2023

Abstract

Academicians and practitioners have focused a lot of attention on the separate issues of pricing and inventory control in a competitive setting. However, integrating these choices in a competitive environment has received scant attention for deteriorating inventory systems from academics despite being crucial to practitioners. From this perspective, our research focuses on designing a supply chain model with inventory coordination to reflect time systems with improved accuracy and optimal control systems. In this research, we develop a two-layer supply chain model consisting of one manufacturer and one retailer incorporating the inventory classification of the retailer. Price-sensitive market demand and two-parameter time-varying Weibull distribution deterioration have been assumed to develop the mathematical model. First, a collective decision on price and inventory control of a deteriorating product has been evaluated in a duopoly environment. Secondly, to explore the decentralized scenario, we have proposed the NSGA-II algorithm to solve the bi-objective programming problem of the two-layer supply chain. The paper aims to explore product collaborative pricing policies and the inventory decision of the deteriorating item in two-layer supply chain coordination. Finally, numerical research is conducted to execute the centralized supply chain and NSGA-II application in a decentralized supply chain. The research findings can provide valuable insights for members of the two-layer supply chain to make optimal product pricing and inventory scheduling decisions.