The inventory and pricing decisions in a three-echelon supply chain of deteriorating items under probabilistic environment

This study addresses the problem of inventory control and pricing in a three-echelon supply chain (SC) with deteriorating items. It is assumed that deterioration and demand and functions of the manufacturer and retailer are probabilistic, and relationship between SC members is according to the “delayed equal-sized shipment inventory policy”. One integrated policy and three non-integrated ones are formulated, and the conditions to obtain the solution are discussed. Through the simulation and sensitivity analysis on an extended numerical example, some managerial implications are presented. Moreover, a compensation policy is used for evaluation of the benefits and losses related to non-integrated policies.