A partially integrated production-inventory model with interval valued inventory costs, variable demand and flexible reliability

This paper formulates a production-inventory model to investigate the effects of partially integrated production and marketing policy of a manufacturing firm. Demand is assumed to be variable and dependent on the selling price and marketing cost. Also, different inventory costs are considered as interval valued. Shortages are permitted and partially backlogged with a rate dependent on the waiting time. Considering that manufacturing process generates defective units four possible cases have been identified and studied. Basically, the optimization problems (maximization problem for Marketing department and minimization problems for Production and Research & Development departments) have been formulated and solved. For solving these optimization problems, an efficient soft computing algorithm based on Particle Swarm Optimization-Constriction factor (PSO-CO) is proposed. In order to illustrate and validate the production-inventory model a numerical example is solved. Finally, a sensitivity analysis is done to study the effect of changes of different system parameters on optimal policies. (C) 2017 Elsevier B.V. All rights reserved.