ANALYSIS OF INVENTORY CONTROL IN SUPPLY

CHAIN MANAGEMENT

REVISED THESIS SUBMITTED TO

THE GANDHIGRAM RURAL INSTITUTE (DEEMED TO BE UNIVERSITY)
IN PARTIAL FULFILLMENT OF THE REQUIREMENTS
FOR THE AWARD OF THE DEGREE OF
DOCTOR OF PHILOSOPHY

BY

S. HEMAPRIYA

THE GANDHIGRAM RURAL INSTITUTE

(DEEMED TO BE UNIVERSITY)
GANDHIGRAM - 624 302
TAMIL NADU
INDIA

S EPTEMBER - 2021
Dr. R. UTHAYAKUMAR, M.Sc., M.Phil., B.Ed., PGDCA., Ph.D.
Professor
Department of Mathematics
The Gandhigram Rural Institute (Deemed to be University)
Gandhigram - 624 302

CERTIFICATE

This is to certify that the thesis entitled ANALYSIS OF INVENTORY CONTROL IN

SUPPLY CHAIN MANAGEMENT is the bonafide record of the original research work
carried out by S. HEMAPRIYA, under my supervision and it has not been submitted
elsewhere for the award of any degree/ diploma.

Place : Gandhigram
Date : Signature of the Supervisor
 DECLARATION

I, S. HEMAPRIYA, declare that the thesis entitled ANALYSIS OF INVENTORY

CONTROL IN SUPPLY CHAIN MANAGEMENT is the bonafide record of the original
research work carried out by me under the guidance of Dr. R. UTHAYAKUMAR,
Professor, Department of Mathematics, The Gandhigram Rural Institute (Deemed to be
University), Gandhigram and it has not been submitted earlier elsewhere for the award of
any degree/ diploma.

Place : Gandhigram
Date : Signature of the Candidate
 ACKNOWLEDGEMENTS

I first of all thank the ALMIGHTY GOD for providing me the great opportunity, intellect
and power to complete my Ph.D programme.
Foremost, I would like to express my heartfelt respect and sincere gratitude to my
research supervisor, Dr. R. UTHAYAKUMAR, Professor, Department of Mathematics,
The Gandhigram Rural Institute (Deemed to be University), Gandhigram for his patience
guidance, constructive comments, constant encouragement and tremendous support
throughout this research work. I also thank him for providing me good research
environment and the learning for the life. It is good foundation for me to learn from his
wide knowledge and vast research experience.
I sincerely thank the external member of the Doctoral Committee
Dr. T. RAMACHANDRAN, Head, Department of Mathematics, MVM Arts College for
Women, Dindigul for his valuable suggestions to complete this research work effectively.
I am happy to express my gratefulness to Dr. P. BALASUBRAMANIAM, Former
Registrar, Professor and Head, Department of Mathematics, The Gandhigram Rural Institute
(Deemed to be University), Gandhigram for his constant support throughout the research
period. I thank the authorities of The Gandhigram Rural Institute (Deemed to be University),
Gandhigram for providing all the necessary facilities for doing research.
I take this opportunity to record my profound thanks to Department of Science and
Technology (DST-INSPIRE), NEW DELHI, for providing financial assistance to do this
research work. I have a great pleasure to thank the non-teaching and technical staff of the
Department of Mathematics for their kind help during the period. I propose thanks to all my
research colleagues for their kind help during the tenure of my study.
I express my honor thanks to my mother Mrs. S. CHITRAKALA, father Mr. D.
SELVARAJ, my husband Mr. P. BUVANENDRAN and my family members for their
encouragements during the entire period of this study.
S. HEMAPRIYA
List of Abbreviations

Abbreviation Description
CDF Cumulative Distribution Function
SLC Service Level Constraint
GHG Green House Gas
EOQ Economic Order Quantity
EPQ Economic Production Quantity
JETC Joint Expected Total Cost
JETP Joint Expected Total Profit
GA Genetic Algorithm
PDF Probability Density Function
SOSC Second Order Sufficient Condition
CET Carbon Emission Tax

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List of Notations and Symbols

Notation Description
D average demand of the buyer, units/year
A buyer’s ordering cost per order, $/order
P vendor’s annual rate of production, units/year
n the total number of shipments from the vendor to the buyer, a positive integer
S vendor’s production set-up cost per batch, $/batch
S0 original setup cost before any investment is made
Q buyer’s order quantity, units/order
q1 size of the first shipment from the vendor to the buyer
qi size of the i th shipment
k safety factor
λ geometric growth factor
r reorder level
R rework cost per unit
hv vendor’s holding cost ($/unit/year)
hb buyer’s holding cost ($/unit/year)
L length of lead time for the buyer
R(L) lead time crashing cost function
β fraction of the shortage that will be backordered at the buyer’s end, 0 ≤ β ≤ 1
w weight of a unit part
d transportation distance
α discount factor for LTL shipments, 0 ≤ α < 1
Fx freight rate for full truckload of a given per mile
Fy freight rate for partial truckload of a given per mile
wx full truckload shipping weight
σ standard deviation
ρ penalty, (ρ ≥ η)
η incentives

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Notation Description
LVTE Limit Value of Transport Emission
LVIE Limit Value of Industrial Emission
s buyer’s unit screening cost
I inspection cost
x buyer’s screening rate (units/year)
y1 probability of type I error (classifying a non-defective product as defective)
y2 probability of type II error (classifying a defective product as non-defective)
y percentage of defective products produced
ye the percentage of defective products observed by the vendor through screening
f (y1 ) probability density function of y1
f (y2 ) probability density function of y2
f (y) probability density function of y
c unit production cost
ca cost of falsely accepting a defective product
cr cost of falsely rejecting a non-defective product
wy actual shipping weight
π buyer’s shortage cost per unit short
π0 marginal profit per unit
πx price discount offered on backorder by the vendor per unit, 0 ≤ πx ≤ π0
k1 backup factor of batch 1
k2 backup factor of batch 2, 3...m
Ts setup and transportation time
Tt transportation time
X random variable of the lead time demand
f (x) PDF of the random variable X
E(·) mathematical expectation

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List of Figures

3.1 Flowchart of algorithm . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

3.2 Process A of the flowchart of the algorithm . . . . . . . . . . . . . . . . . 40
3.3 Process B of the flowchart of the algorithm . . . . . . . . . . . . . . . . . 41
3.4 Graphical representation of the optimal solution . . . . . . . . . . . . . . . 43
3.5 Graphical representation of the optimal solution when c1 =10. . . . . . . . . 44
3.6 Graphical representation of the optimal solution when c1 =15. . . . . . . . . 53
3.7 Graphical representation of the optimal solution when c1 =20. . . . . . . . . 53
3.8 Graphical representation of the optimal solution when c1 =25. . . . . . . . . 54
3.9 Graphical representation of the optimal solution when h=30. . . . . . . . . 54
3.10 Graphical representation of the optimal solution when h=35. . . . . . . . . 55
3.11 Graphical representation of the optimal solution when h=40. . . . . . . . . 55
3.12 Graphical representation of the optimal solution when h=45. . . . . . . . . 56

4.1 Graph of stock against time for the case λ = P /D . . . . . . . . . . . . . . 62

5.1 Vendor’s inventory in a cycle . . . . . . . . . . . . . . . . . . . . . . . . . 91

5.2 Vendor’s total inventory in the i th cycle with learning in production . . . . 95
5.3 Impact of Penalty on total cost . . . . . . . . . . . . . . . . . . . . . . . . 111
5.4 Impact of Incentives on total cost . . . . . . . . . . . . . . . . . . . . . . . 111
5.5 Impact of Carbon emission tax on total cost . . . . . . . . . . . . . . . . . 112
5.6 Impact of Learning exponent on total cost . . . . . . . . . . . . . . . . . . 112

6.1 Depletion of inventory on the buyer side . . . . . . . . . . . . . . . . . . . 120

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6.2 Vendor’s inventory level in a cycle with time . . . . . . . . . . . . . . . . . 121
6.3 Vendor’s holding area . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122
6.4 Graphical representation of example 1 . . . . . . . . . . . . . . . . . . . . 148
6.5 Graphical representation of example 2 . . . . . . . . . . . . . . . . . . . . 149
6.6 Graphical representation of example 3 . . . . . . . . . . . . . . . . . . . . 149

7.1 Change of parameter A in total cost . . . . . . . . . . . . . . . . . . . . . 176

7.2 Change of parameter π in total cost . . . . . . . . . . . . . . . . . . . . . 176
7.3 Change of parameter P in total cost . . . . . . . . . . . . . . . . . . . . . 177
7.4 Change of parameter Wpx in total cost . . . . . . . . . . . . . . . . . . . . 177
7.5 Change of parameter Wtx in total cost . . . . . . . . . . . . . . . . . . . . 178
7.6 Change of parameter t in total cost . . . . . . . . . . . . . . . . . . . . . . 178

8.1 Graphical representation of table 8.1 . . . . . . . . . . . . . . . . . . . . . 193

8.2 Impact of changes in P on total profit . . . . . . . . . . . . . . . . . . . . 194
8.3 Impact of changes in S on total profit . . . . . . . . . . . . . . . . . . . . . 196
8.4 Impact of changes in π on total profit . . . . . . . . . . . . . . . . . . . . 196
8.5 Impact of changes in R on total profit . . . . . . . . . . . . . . . . . . . . 197
8.6 Impact of changes in F on total profit . . . . . . . . . . . . . . . . . . . . . 197
8.7 Impact of changes in A on total profit . . . . . . . . . . . . . . . . . . . . 198
8.8 Impact of changes in d on total profit . . . . . . . . . . . . . . . . . . . . . 198

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List of Tables

3.1 The optimal solutions for descriptive example and comparisons . . . . . . . 42

3.2 Summary of the optimal solutions and comparisons . . . . . . . . . . . . . 43
3.3 Effects of c1 = 10 on optimal solution . . . . . . . . . . . . . . . . . . . . . 45
3.4 Effects of c1 = 15 on optimal solution . . . . . . . . . . . . . . . . . . . . . 46
3.5 Effects of c1 = 20 on optimal solution . . . . . . . . . . . . . . . . . . . . . 47
3.6 Effects of c1 = 25 on optimal solution . . . . . . . . . . . . . . . . . . . . . 48
3.7 Effects of h= 30 on optimal solution . . . . . . . . . . . . . . . . . . . . . 49
3.8 Effects of h= 35 on optimal solution . . . . . . . . . . . . . . . . . . . . . 50
3.9 Effects of h= 40 on optimal solution . . . . . . . . . . . . . . . . . . . . . 51
3.10 Effects of h= 45 on optimal solution . . . . . . . . . . . . . . . . . . . . . 52

4.1 Lead time component with data. . . . . . . . . . . . . . . . . . . . . . . . 72

4.2 Freight rate schedule. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
4.3 Optimal solutions for descriptive example 4.1 with capacity problem (wx =
9999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
4.4 Study and differentiation of LTL and TL with incapacity problem (wx = 9999) 74
4.5 Optimal solutions for descriptive example 4.2 with capacity problem (wx =
1950) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
4.6 Optimal solutions for descriptive example 4.3 with capacity problem (wx =
2500) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
4.7 Changes in the value of JET C when the reduction parameters are
represented by the value as λ = 2.00 for wx = 9999 . . . . . . . . . . . . . 77

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4.8 Changes in the value of JET C when the reduction parameters are
represented by the value as λ = 2.50 for wx = 9999 . . . . . . . . . . . . . 78
4.9 Changes in the value of JET C when the reduction parameters are
represented by the value as λ = 3.00 for wx = 9999 . . . . . . . . . . . . . 79
4.10 Sensitivity of price discount πx = 110 when λ = 1.5, Fx = 0.000101343 &
wx = 9999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
4.11 Sensitivity of price discount πx = 90 when λ = 1.5, Fx = 0.000101343 &
wx = 9999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
4.12 Sensitivity of transportation distance d = 660 when λ = 1.5,
Fx = 0.000101343 & wx = 9999 . . . . . . . . . . . . . . . . . . . . . . 80
4.13 Sensitivity of transportation distance d = 540 when λ = 1.5,
Fx = 0.000101343, wx = 9999 . . . . . . . . . . . . . . . . . . . . . . . 81

5.1 Summary for the values of r1 , r2 and k . . . . . . . . . . . . . . . . . . . . 105

5.2 The analogy of Model 1 & Model 2 . . . . . . . . . . . . . . . . . . . . . 106
5.3 Effect of changes in p = 0.1 . . . . . . . . . . . . . . . . . . . . . . . . . 108
5.4 Effect of changes in p = 0.2 . . . . . . . . . . . . . . . . . . . . . . . . . 108
5.5 Effect of changes in p = 0.3 . . . . . . . . . . . . . . . . . . . . . . . . . 109
5.6 Effect of changes in p = 0.4 . . . . . . . . . . . . . . . . . . . . . . . . . 109
5.7 Effect of changes in penalty when GHG = 35 . . . . . . . . . . . . . . . . 109
5.8 Effect of changes in incentives when GHG = 35 . . . . . . . . . . . . . . 110
5.9 Effect of changes in CET . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
5.10 Effect of changes in b . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110

6.1 An optimum solution for uniform distribution case . . . . . . . . . . . . . 147

6.2 An optimum solution for triangular distribution case . . . . . . . . . . . . . 147
6.3 An optimum solution for beta distribution case . . . . . . . . . . . . . . . 148
6.4 Expected total cost for the fixed and reduced setup cost using uniform
distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150

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6.5 Expected total cost for the fixed and reduced setup cost using triangular
distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150
6.6 Expected total cost for the fixed and reduced setup cost using beta distribution 150
6.7 Effects of parameters on optimal solution using uniform distribution for
linear case . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 152
6.8 Effects of parameters on optimal solution using uniform distribution for
quadratic case . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 152
6.9 Effects of parameters on optimal solution using uniform distribution for
cubic case . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153
6.10 Effects of parameters on optimal solution using triangular distribution for
linear case . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153
6.11 Effects of parameters on optimal solution using triangular distribution for
quadratic case . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154
6.12 Effects of parameters on optimal solution using triangular distribution for
cubic case . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154
6.13 Effects of parameters on optimal solution using beta distribution for linear case155
6.14 Effects of parameters on optimal solution using beta distribution for
quadratic case . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155
6.15 Effects of parameters on optimal solution using beta distribution for cubic case156

7.1 The summary of results . . . . . . . . . . . . . . . . . . . . . . . . . . . . 173

7.2 The optimal solutions for descriptive example . . . . . . . . . . . . . . . . 174
7.3 Sensitivity analysis for different key parameters . . . . . . . . . . . . . . . 175

8.1 Expected total profit for an optimal solution . . . . . . . . . . . . . . . . . 193

8.2 Effects of changes in parameters . . . . . . . . . . . . . . . . . . . . . . . 195

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