MODEL OF COLLABORATION BETWEEN SUPPLIER AND MANUFACTURER FOR THE PROFIT OF SUPPLY CHAIN

A world class supply chain management involves value-adding activities in the
supplying process which to deliver the supplying service at its' optimal total cost, the
least lead time and at the highest quality. At the highest level, supply chain system
can he divided into two: (I) Production planning and inventory control and (2)
Logistics process. The development of this model is based on the reviews on journals
and compilation ofsmveys such as Pahl et al. (2007) and Li et al. (2010). Both
surveys were discussing about recent interests of area of research about deterioration
constraints in inventory. For deterioration constraint, Ghare and Schrader (1963) had
introduced a common function to describe deteriorating inventory. Chakrabarty et al.
(1998) extend Philips model using three parameters Weibull distribution whereas
Wee ( 1999) using two parameters Weibull in addition by incorporating quantity
discount and partial backordering. Wee et al. (2005) has developed a joint strategy
for supplier and buyer under deteriorating constraint. Hou et al. (2009) also presented
deterioration model using continuous discount cash flow to simulate the effect of
inflation and permissible delay. Tripathi et al. (2010) extends Hou's (2009) model by
developing a mathematical model for non-deteriorating model. In this project, the
mathematical model is derived from inventory functionofGhare (1963) and
incorporates economic constraints such inflation and permissible delay from Tripathi
et al. (20 1 0), partial derivation of quantity discount from Benton (2007), order
processing lead time reduction as per Huang et al. (2010) and effect of deterioration
in supplier's inventory from Wee (1999). The new model presented in this project
shall determine the optimal solutions in term of minimum present value of joint total
cost can be achieved under constraints as mentioned above.