The integration of an inventory model and sales decisions in a two-level supply chain for small and medium-sized enterprises with the allowance of rework and backorders for new products with the sensitivity of the demand to price

This paper elaborates This paper develops an integrated two-level inventory model with a manufacturer (seller)-buyer (distributor) supply chain (SC) in the competitive market for the small and medium-sized enterprises (SMEs) with a new product which including defective products and shortages and also consist of the rework process on the defective products. We think that business demand is susceptible to the buyer’s selling price and therefore investigate mixed performances and pricing decisions in the supply chain. We primary determine the predicted advantage per unit of time applying the familiar renewal-reward theorem and later maximize profit for the situations of independent and joint optimization. Numerical examples and sensitivity analysis are presented to demonstrate the suggested models. The results indicate that reworking on defective items in buyer and coordination in the small and medium-size enterprise supply chain enhances the entire predicted profit of the system, especially for situations where the demand sensitivity to the price is very high, and the backorder costs and the average rate of defective quality products are high. Moreover, Besides, due to the fact that in competitive markets the demand is sensitive to the price, the goal of coordination and rework on the imperfect items in the small and medium-sized enterprises (SMEs) supply chain is to reduce the scare items production rate.