<p>A substitute product in economics&#xa0;and consumer theory refers to service or product that consumers see essentially as similar-enough or same as different product. A substitute is a good which can be utilized in other’s places which provides consumers with wider choices, hence have better been capable of satisfying their needs including an iPhone vs. an Android phone. In this paper, Cournot’s price model for substitute products for two-level VMI model, imperfect production, reworking, scrap is considered with advertisement-Cournot’s price-sales return dependent demand and the decision variables of optimal demand, number of deliveries, and green production lot size. In this mathematical model, price-break-even point is determined, law of demand is verified, along with highest possible profit is detected from three alternative product prices. Attaining best price, number of deliveries, along with production lot size for maximizing overall profitability in an imperfect production system has been studied. The mathematical formulation's validity is shown by a numerical experiment, and the effects of inventory components on overall profit as well as managerial insights have been examined utilizing sensitivity analysis.</p>