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Supply chain inventory management via a Stackelberg equilibrium

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  • In this paper we consider one-buyer, one-seller, finite horizon, multi-period inventory models in which the economic order quantity is integrated with the economic production quantity (EOQ-EPQ in short). We introduce the Stackelberg equilibrium framework in which the objective is to maximize the vendor's total benefit subject to the minimum total cost that the buyer is willing to incur. Some existence results, optimality conditions and the optimal replenishment policy under the Stackelberg equilibrium concept are obtained and a numerical algorithm and examples are presented to find the optimal replenishment policy in practice.
    Mathematics Subject Classification: MSBM10.

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