The series of firms that eventually make products and services available to
consumers, including all the functions enabling the production, delivery and recycling of
the materials, components, end products and services, is a supply chain. All
products reach the consumers via some kind of supply chain, some much larger and
complicated than the others. When individual firms in the supply chain make business
decisions that ignore the interests of other chain members, then this sub-optimization only
transfers costs and additional waiting time along the supply chain. This ultimately leads
to higher end-product prices, lower supply chain service levels, and consequently
lower end-customer demand. For this reason, supply chain management definitely
needs some extra concern on the part of the managers. Supply chain management is
the systematic, strategic coordination of the traditional business functions and the
tactics across these functions within a particular company and across businesses within
the supply chain for the purposes of improving the long-term performances of
the individual companies and the supply chain as a whole.
The idea of joint total cost of the supplier and the customer was first introduced
by Goyal (1976). Later, Cohen and Lee (1988) put forward a model for determining
material requirement for all materials at every stage in the supply chain. Pake and
Cohen (1993) extended the above study to consider for stochastic sub systems to explore
the supply chain system. Gyana and Bhabha (1999) explored a single manufacturing
system for procurement of raw materials with a multi-ordering policy that minimizes the
total inventory costs of both the raw materials and the finished goods. Rau et al. (2003) investigated a multi-echelon supply chain for a deteriorating item to derive an
optimal joint total cost from an integrated perspective among the supplier, the producer
and the buyer. Wee and Yang (2004) developed a heuristic solution model for a
producer-distributors-retailers inventory system using the principle of strategic
partnership. Jaber et al. (2006) used the principles of thermodynamics to estimate entropy cost in
a two level supply chain coordination context. Ahmed et al. (2007) have recently coordinated a two level supply chain in which they considered production
interruptions for restoring of the quality of the production process.
The concept of inflation is not new to the world. Inflation refers to a continuous
rise in the prices of goods and services. It can also be defined as too much currency
chasing too few commodities leading to a general increase in the price levels. Buzacott
(1975), Misra (1979), and Chandra and Bahner (1985) are amongst the first few who
studied the concept of inflation with regard to inventory. The effects of inflation on a
permissible delay model were studied by Liao et
al. (2000). Chung and Lin (2001) investigated
a deteriorating inventory replenishment problem over a finite planning horizon.
They developed their model taking both complete backlogging and without backlogging
in an inflation affected environment. Chang (2004) deliberated the effects of inflation
on an Economic Order Quantity (EOQ) model when the supplier permits a delay
in payment by the retailer if the retailer orders a large quantity. Hou (2006) derived
an inventory model for deteriorating items with stock-dependent consumption rate
and shortages under inflation and time discounting over a finite planning horizon.
Lo et al. (2007) developed an integrated production
and inventory model from the perspectives of both the manufacturer and the retailer assuming a varying rate
of deterioration, partial backordering, inflation, imperfect production processes
and multiple deliveries. Singh and Jain (2007) studied the effects of inflation on a
two warehouse inventory model with a bulk release rule. Singh and Jain (2008)
deliberated the effects of inflation on an inventory model with Weibull deterioration and
partial backlogging. |
