Analyzing Optimal Pricing Decisions in a Supply Chain with Breakdown and Inspection Considerations under Return Contract

This research develops two production-inventory models for a two-echelon supply chain with one manufacturer and one retailer under two scenarios where market demand depends on price. Here, it is assumed that the products are produced with both perfect and imperfect qualities during the production process. Under the first scenario, imperfect items are scrapped instantly after finishing inspection run while under the second one, imperfect items are reworked instantly after finishing production run and sold as healthy item to the retailer. A return contract is considered between the partners so that raw material and finished product with imperfect quality is sent back to up-stream member at a lower price. Determining the retail price is the goal of the research to maximize the total profit of chain. Moreover, a Stackelberg game approach is applied between the partners to solve the models. Additionally, the concavity of the retailer’s profit functions is proven. Then, closed form solutions are derived for the decision variables. Finally, to illustrate the applicability of the model, a numerical example is presented

کلیدواژه ها:

Pricing ، Breakdown ، Inspection ، Return Contract ، Game Theory ، Supply Chain