An Integrated EOQ Model with Single Wholesaler and Multiple Retailers

This study introduces multi-item EOQ inventory models tailored for a system that includes a wholesaler and n retailers. The wholesaler encounters random and independent demands, with the assumption that both items are readily available. In the event that items do not find a buyer, they are retained in inventory and subsequently offered at a salvage price, which is set below the standard selling price. In instances where a specific item is depleted while the overall inventory remains abundant, the unavailable item is replaced with an alternative from the available stock, and the surplus inventory is subsequently offered at a salvage price. Considering the substitutability of items, a range of interrelated scenarios between wholesalers and retailers is conceptualized as distinct subsystems. Retailers encounter demand that is contingent upon stock levels and are permitted to experience shortages. In the context of a unified management structure for both wholesaler and retailers, an integrated model is formulated to optimize a collective profit function while adhering to spatial limitations. Illustrative numerical results are presented, and the model is addressed utilizing the LINGO software.