Developing an Economic Production Quantity Model in Integrated and Non-integrated Three-Layer Supply Chains with an Optimal Inventory Control Policy

In this research, we develop an economic production quantity model in a three layers supply chain with two different structures. Aforementioned chain composed of a supplier, a manufacturer and multiple retailers. In this chain, the supplier transforms raw material to the semi-finished product and sends them to the manufacturer and then the manufacturer transmutes them to the finished product and delivers to the retailers in order to satisfy market demand. The retailers replenish their inventory at the same time and demand of each retailer is different due to essence of various demand customers and according to the decisions of the chain’s members, two structures of non-integrated and integrated supply chains are surveyed. In this research, we will use the Stackelberg approach to solve the presented models. The ordering cycle of retailers is the decision variable of the model. The main aim of this study is to develop an inventory and production model in three layers supply chains in order to minimize the total cost of chain by utilizing the optimal inventory control policy. At last, numerical examples are presented for each structure of supply chains.