Single-producer, multi-distributor-retailer tree-type supply chain problem with backorder

Abstract

This research deals with a three-stage integrated inventory problem of tree-type single-producer multi-distributor multi-retailer supply chain network. This paper relaxes one constraint of Wee and Yang (2004) in which shortage is not allowed. The total cost model was developed based on the model presented by Wee and Yang considering the cost of backorder. Four variables that compose the total cost function are optimized to determine the optimal replenishment policy for producer, distributors, and retailers to achieve the lowest total cost. Sensitivity analysis was also applied to evaluate the outcome of the proposed solution procedure presented in this research.