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A Green Supply Chain Production Inventory Model with Uncertain Holding

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Article in International Journal of Process Management and Benchmarking · July 2017

DOI: 10.1504/IJPMB.2017.10003345

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Int. J. Process Management and Benchmarking, Vol. 7, No. 3, 2017 277

A green supply chain production inventory model

with uncertain holding cost

Debnarayan Khatua
Department of Basic Science and Humanities,
Global Institute of Science and Technology,
Haldia, Purba Medinipur – 721657, West Bengal, India
Email: devnarayan87@gmail.com

Gourisankar Roymahapatra
Department Applied Sciences,
Haldia Institute of Technology,
ICARE Complex,
Haldia, Purba Medinipur – 721657, West Bengal, India
Email: gourisankar1978@gmail.com

Kalipada Maity*
Department of Mathematics,
Mugberia Gangadhar Mahavidyalaya,
Purba Medinipur – 721425, West Bengal, India
Email: kalipada maity@yahoo.co.in
*Corresponding author

Abstract: A green supply chain (GrSC) model with two plants facilities
is formulated under uncertain environment. At first suppliers receive the
deteriorating items in a lot and supplies the fresh units to manufacturer for
production. Manufacturer has two plants: plant-1 and plant-2. Manufacturer
purchases these fresh raw materials at a constant rate from supplier to
manufacture the main product in plant-1. Retailer-I has purchased this product
from manufacturer of plant-1 to sale it to the customers. The residue units
of plant-1 has transferred to plant-2 with constant rate to manufacture
another usable by-product. Retailer-II then purchases usable by-product and
sales to the customers. Ideal costs of suppliers, manufacturer and retailers
have been taken into account. Due to complexity of market situation, all
inventory holding costs are considered as uncertain variables and these are
reduced to crisp ones using uncertain theory. Supply rate, production rate and
by-production rates are assumed as decision variables. Integrated model has
been developed and solved analytically in crisp and uncertain environments
to find the optimum value of the decision variables. Finally corresponding
individual profits are calculated through numerical and graphical methods.

Keywords: green supply chain; GSC; two plant facilities; production and
by-production; uncertain variable.

Copyright © 2017 Inderscience Enterprises Ltd.

278 D. Khatua et al.
Reference to this paper should be made as follows: Khatua, D.,
Roymahapatra, G. and Maity, K. (2017) ‘A green supply chain production
inventory model with uncertain holding cost’, Int. J. Process Management
and Benchmarking, Vol. 7, No. 3, pp.277–304.

Biographical notes: Debnarayan Khatua is a Lecturer in Mathematics in the

Department of Basic Science and Humanities in Global Institute of Science
and Technology, Haldia, West Bengal, India. He qualified ‘GATE’ in 2015.
He received a Best Award in Poster Presentation in Mathematics in the 4th
International Conference organised by World Science Congress, India in 2014.
His research interests are in inventory and optimal control of production
systems in fuzzy, fuzzy rough, uncertain environments.

Gourisankar Roymahapatra is an Assistant Professor of Chemistry at

Department of Applied Sciences in Haldia Institute of Technology, Haldia,
India. His research field is organometallic chemistry, N-heterocyclic carbene
(NHC) complexes & environmental studies. He has received ‘Distinguished
Young Scientist Award – 2014’ from World Science Congress, India, for
his research in Chemistry. He was awarded at NCQC-2007 (per-excellence
category) and CCQC-2010 (gold category) from QCFI, India. He has
published 11 research articles in international, national journals, and numerous
seminar proceedings. Two of his articles selected as ‘Top 25 hottest article in
ScienceDirect’ by Elsevier B.V.

Kalipada Maity is an Assistant Professor in Department of Mathematics. He

received a ‘Prof. M.N. Gopalan Award’ for best doctoral thesis in operational
research organised by ORSI, India in 2006. He has published at least 40
papers in international journals like IJOR, EJOR, AMC, AMM, MCM, Inf.
Science, FODM, Opt. and Eng., Int. J. of System Science and other journal.
His research filed is inventory management, operation research, uncertain
theory, fuzzy-rough optimisation.

This paper is a revised and expanded version of a paper entitled [title]

presented at [name, location and date of conference].

1 Introduction

Nowadays along with the fast growth of industrialisation in the world, the environmental
and ecological impacts of products have become a major issue. Considering merely
the economical impacts of industrial decisions and excluding their ecological impacts
make the human beings and animals more vulnerable to various threats such as global
warming, toxic environment, ozone layer depletion, and natural resources depletion, etc.
Therefore, the first and most important step in this endeavour is to analyse products
impact on environment with a holistic approach. This holism includes the analysis of
the products’ life cycle from the very beginning up to the very end of it. Using this
approach, ecological impacts of every little decision in various production stages such as
product conceptualisation, design, raw materials processing, manufacturing, assembling,
warehousing, packaging, transportation, refurbishing, and reusing are measured and
considered in designing the product and the required operations.
 A green supply chain production inventory model 279

A supply chain model (SCM) is a network of supplier, producer, retailer and

customer which synchronises a series of inter-related business process in order to have:

1 optimal procurement of raw materials from market

2 transportation of raw-materials into warehouse
3 production of the goods in the production centre
4 distribution of these finished products to the retailer for sale to the customers.

With a recent paradigm shift to the supply chain (SC), the ultimate success of a firm
may depend on its ability to link supply chain members seamlessly.
Traditional definitions of SC and SCM have very little to do with what the product is
going through after its delivery to customers. But during recent years, SC managers tend
more to consider environmental aspects in their decision making process. Green supply
chain (GrSC) is not just about considering environment aspect in SC decision making
processes, but also about productivity and making more profit. GrSC concepts manage
environmental impacts where they occur, ideally before they occur. Green supply chain
management (GrSCM) tries to reduce the undesirable environmental impacts of supply
chain processes within the participating organisations and the whole supply chain as
well. Srivastava (2007) defined GrSCM as integrating environmental thinking into
supply-chain management, including product design, material sourcing and selection,
manufacturing processes, delivery of the final product to the consumers as well as
end-of-life management of the product after its useful life. GrSCM has emerged from
two origins. First, environmental managers started to use life cycle assessment (LCA)
approach for assessing products environmental impacts. In addition to usual product
design and manufacturing processes, this approach considers many logistical activities
such as material handling, packaging, distribution and by production to reduce disposal.
Similarly, creative supply chain managers and analysers tried to improve and optimise
supply chain processes by integrating environmental issues with SCM practices.
One of the earliest efforts to create an integrated SCM dates back to Bookbinder
et al. (2009), Agarwal et al. (2004) and others. They developed a production,
distribution and inventory (PDI) planning system that integrated three supply chain
segments comprised of supply, storage/location and customer demand planning. The
core of the PDI system was a network model and diagram that increased the decision
maker’s insights into supply chain connectivity. The model however was confined to
a single-period and single-objective problem. Das et al. (2007) have been developed
a two warehouse supply-chain model under possibility/necessity/credibility measures.
Peidro et al. (2010) develops a fuzzy linear programming model for tactical supply
chain planning in a multi-echelon, multi-product, multi-level, multi-period supply chain
network in fuzzy environment. Krishnan and Winter (2010) developed an inventory
dynamics and SCM. Chu (2011) developed the supply chain flexibility that has
become increasingly important. This study thus builds a group decision-making structure
model of flexibility in supply chain management development. Kristianto et al. (2012)
developed an adaptive fuzzy control application to support a vendor managed inventory
(VMI). This paper also guides the management in allocating inventory by coordinating
suppliers and buyers to ensure minimum inventory levels across a supply chain. Hoque
(2011) has developed an optimal solution technique in the single-vendor multi-buyer
integrated inventory supply chain by incorporating some realistic factors. Jana et al.
280 D. Khatua et al.

(2013) developed a three layer supply chain production inventory model under
permissible delay in payment in uncertain environment. Jonrinaldi (2013) developed
an integrated supply chain production inventory model involving reverse logistics with
finite horizon period. Glock et al. (2013) have developed some tremendous supply chain
models. Khan et al. (2014) developed an integrated supply chain model with errors in
quality inspection and learning in production. Recently, Kim et al. (2014) developed
a closed-loop supply chain for deteriorating products under stochastic container return
times.
Different types of uncertainty such as randomness, fuzziness, roughness,
bi-fuzzyness are common factors in any production inventory problem. In many cases,
it is found that some inventory parameters are uncertain in nature. For example, the
inventory related costs depend on several factors such as bank interest, stock amount,
market situation, etc., which are of uncertain sense. To be more specific, inventory
holding cost sometimes depends on the storage amount which are fluctuated due to
several factors such as scarcity of storage space, market fluctuation, human estimation/
thought process. Maity et al. (2008) have developed a production-recycling-inventory
system with imprecise holding costs. Also, Lee and Yao (1998) developed an economic
production quantity for fuzzy demand and fuzzy production quantity. Maity and
Maiti (2007) developed two plant optimal production inventory model with imprecise
parameters. Xu and Zhao (2010) have developed a multi-objective decision-making
model with fuzzy rough coefficients and its application to the inventory problem.
Maity (2011) developed a two warehouse production-inventory problem in imprecise
environment.
In this paper, we have developed a three stage integrated production and
by-production inventory model with uncertain holding cost. Here supplier receives the
deteriorating items in a lot and supply fresh units to manufacturer which has two plants:
plant-1 and plant-2. Manufacturer produced the main product in plant-1 and residue
product of plant-1 is consider as the raw material of the plant-2 and produced the
by-product units in plant-2. This type of by-product is not only beneficiary to the
manufacturer but also it reduced the environmental pollution from residue units. Main
products of plant-1 are purchased by retailer-I and customers’ demand are fulfilled
by these products from retailer-I. Also, by-product units in plant-2 are purchased
by retailer-II and fulfil the customers’ demand of retailer-II. Here, the supply rate,
production and by-production rates are assumed as decision variables. Due to complexity
of market situation and storage amount, inventory holding costs for all the supply
chain members are considered as uncertain ∮ variables and these are reduced to crisp
ones using uncertainty theory in article 3. Integrated model has been developed
analytically in crisp and uncertain environments to find the optimum value of the
decision variables and finally corresponding individual profits are calculated through
numerically and graphically. Best of the knowledge, none can consider this type of
supply chain production/by-production inventory model in uncertain environment.
 A green supply chain production inventory model 281

2 Literature review

One of the earliest efforts to create an integrated SCM dates back to Karabakal et al.
(2000). They developed a production, distribution and inventory (PDI) planning system
that integrated three supply chain segments comprised of supply, storage/location and
customer demand planning. The core of the PDI system was a network model and
diagram that increased the decision maker’s insights into supply chain connectivity.
The model, however was confined to a single-period and single-objective problem.
Agarwal et al. (2004) and Viswanathan and Piplani (2001) concerned an integrated
inventory model through common replenishment in the SC. Rau et al. (2004) developed
an integrated SCM of a deteriorating item with shortages. All the above SCMs are
considered with constant, known demand and production rates.
Peidro et al. (2010) have developed a fuzzy linear programming-based approach for
tactical supply chain planning in an uncertainty environment. Kabak and Ulengin (2011)
have developed a possibilistic linear-programming approach for supply chain networking
decisions.
Also, Monthatipkul and Yenradee (2008) have developed an inventory/distribution
control system in a one-warehouse/multi-retailer SCM. Later, due to large stock and
limited capacity of exiting storage (market warehouse, MW), an additional storage of
infinite capacity (with sufficient space) (rented warehouse, RW) which is located away
from MW is rented to store the excess items. Several authors (e.g., Pakkala and Achary,
1992; Bhunia and Maiti, 1997; Maiti and Maiti, 2006; Das et al., 2007; Maity, 2011;
and others) have considered these type of inventory models for defective/deteriorating
items under crisp/fuzzy environment. Wang et al. (2012) have developed a two-stage
fuzzy-AHP model for risk assessment of implementing green initiatives in the fashion
supply chain model. Paksoy and Pehlivan (2012) have developed a fuzzy linear
programming model for the optimisation of multi-stage supply chain networks with
triangular and trapezoidal membership functions. Very recent some researchers (Sahu
et al., 2013; Sahu et al., 2013; Chakraborty and Mandal, 2014) have developed the
supply chain.
Recently, Liu (2007) introduced uncertain theory in 2007. Later, the said theory has
been well developed and applied in a wide variety of real problems. Many research
works have been done on the development of uncertainty theory and related theoretical
work. You (2009) proved some convergence theorems of uncertain sequences. Liu
(2009) has defined uncertain process and Liu (2010) has discussed uncertain theory.
Recently, Jana et al. (2013) developed a three layer supply chain production inventory
model under permissible delay in payment by using this uncertain theory. Also recently
Hazari et al. (2015) developed an imperfect production inventory control problem in
bi-fuzzy environment. In this paper, a green supply chain production/by-production
inventory model with two plants facilities has been developed in crisp and uncertain
environment.

3 Necessary knowledge about uncertain variable

To better describe the subjective imprecise quantity, Liu (2007, 2008, 2009) proposed
an uncertain measure and further developed an uncertainty theory which is an axiomatic
system of normality, duality, subadditivity and product measure.
282 D. Khatua et al.

3.1 Uncertain measure

Definition 1: Let us define an uncertain measure M on the σ-algebra L. That is,

a number M{Λ} will be assigned to each event {Λ} to indicate the belief degree
with which we believe {Λ} will happen. There is no doubt that the assignment is not
arbitrary, and the uncertain measure M must have certain mathematical properties. In
order to rationally deal with belief degrees, Liu (2007) suggested the following three
axioms:

Axiom 1 (normality axiom): M{Γ} = 1.

Axiom 2 (duality axiom): M{Λ}+M{ΛC } = 1, for any event Λ.

Axiom 3 (subadditivity axiom): For every countable sequence of events Λ1 , Λ2 , · · · ,

we have
{∑
∞ } ∑∞ { }
M Λi ≤ M Λi .
i=1 i=1

3.2 Product uncertain measure

Product uncertain measure was defined by Liu (2009), thus producing the fourth axiom
of uncertainty theory. Let (Γk , Lk , Mk ) be uncertainty spaces for k = 1, 2, · · · . Write
Γ = Γ1 × Γ2 × · · · that is the set of all ordered tuples of the form (γ1 , γ2 , · · · ) where
γk ∈ Γk for k = 1, 2, · · · . A measurable rectangle in Γ is a set Λ = Λ1 × Λ2 × · · · ,
where Λk ∈ Lk for k = 1, 2, · · · . The smallest σ-algebra containing all measurable
rectangles of Γ is called the product σ-algebra, denoted by L = L1 × L2 × · · · . Then
the product uncertain measure M on the product σ-algebra L is defined by the following
product axiom (Liu Liu (2009)).

Axiom 4 (product axiom): Let (Γk , Lk , Mk ) be uncertainty spaces for k = 1, 2, · · · . The

product uncertain measure M is an uncertain measure satisfying
{∏
∞ } ∏∞ { }
M Λk ≤ M Λk
k=1 k=1

where Λk are arbitrarily chosen events from Lk for k = 1, 2 · · · , respectively.

Definition 2 (Liu, 2007): The uncertainty distribution Φ : R → [0, 1] of an uncertain

variable ξb is defined by

Φ(t) = M{ξb ≤ t}

Let ξb ∼ L(a, b) be a linear uncertain variable. This linear uncertain variable is depicted
in Figure 1.
 A green supply chain production inventory model 283

Figure 1 Linear uncertainty variable

Definition 3: Let ξb be an uncertain variable with regular uncertainty distribution Φ. Then

the inverse function Φ−1 is called the inverse uncertainty distribution of ξ. b

Definition 4 (Liu, 2007): Let ξb be an uncertain variable. Then the expected value of ξb
is defined by
∫ ∞ ∫ 0
b
E[ξ] = b
M{ξ ≥ r}dr − Mc{ξb ≤ r}dr (1)
0 −∞

provided that at least one of the two integrals is finite.

Theorem 1 (Liu, 2008): Let ξb be an uncertain variable with uncertainty distribution Φ.

∫
b = 1 Φ−1 (α)dα
If the expected value exists, then E[ξ] 0

Theorem 2 (Liu, 2008): Let ξb and ηb be independent uncertain variables with finite
expected values. Then for any real numbers a1 and a2 , we have

E[a1 ξb + a2 ηb] = a1 E[ξ]

b + a2 E[b
η] (2)

Lemma 1: Let ξb ∼ Z(a, b, c) be a zigzag uncertain variable. Then its inverse uncertainty
distribution Φ−1 (α) = 12 [(1 − α)a + b + αc] and it can be expressed as
∫ 1
b = 1 a + 2b + c
E[ξ] [(1 − α)a + b + αc]dα = (3)
0 2 4

4 Uncertain single objective programming

Uncertain programming is a type of mathematical programming involving uncertain

b cannot be directly minimised,
variables. Since an uncertain objective function fi (x, ξ)
we may minimise its expected value. Assume that x is a decision vector, ξb is an
uncertain vector, f is an objective function and gj are constraints functions for
j = 1, 2, · · · , p. Let us examine

 Min f{(x, ξ) b
gj (x) ≤ 0, j = 1, 2, · · · , p (4)
 s.t
x∈X
284 D. Khatua et al.

In order to obtain a decision with minimum expected objective value subject to a set of
chance constraints, Liu (2008) proposed the above uncertain programming model (4) is
equivalent to the crisp model (5) as follows:

 minx b
E[f (x, ξ)]
subject to (5)

gj (x) ≤ 0, j = 1, 2, · · · , p.

where f (x, ξ) b is the objective function, gj (x) are constraint functions for
j = 1, 2, · · · , p.

5 Assumptions and notations

Consider a suppler chain involving a supplier, a manufacturer with two plant (one for
production and another for by-production) and two retailer. The pictorial representation
of the supply chain configuration is shown in Figure 2.

Figure 2 Block diagram of the SCM

The following assumption and notation are consider to develops the integrated
production inventory model.

5.1 Assumptions

1 model is developed for single item product

2 lead time is negligible
3 only suppliers supply rate, i.e., demand rate of manufacturer is considered as
decision variable
4 joint effect of supplier, manufacturer, retailer-I and retailer-II is considered in the
supply chain management
5 constant deterioration θ(< 1) occurs only in case of raw material of supplier
6 idle cost of suppliers, manufacturers and retailer are taken into account
 A green supply chain production inventory model 285

7 the disposal cost of plant-2 is negligible

8 the demand rates of retailers-I, -II and customer from retailers-I, -II are constant
9 the purchase costs for suppler, manufacturer and retailer are constant
10 the selling prices of suppler, manufacturer and retailer are constant
11 some inventory costs like holding, setup and idle costs are considered as crisp
and fuzzy rough variables
12 shortages are not allowed.

5.2 Notations

5.2.1 For the supplier

qs (t) inventory level of suppliers at time t
Q replenishment lot size of supplier
R supply rate to manufacturer from supplier
Cs purchase cost per unit item for supplier
Ts cycle length of the supplier
hs holding cost per unit per unit time of supplier
As setup cost of supplier
ids idle cost per unit time of supplier
∗
AP S optimum value of average profit of the supplier.

5.2.2 For the manufacturer

γR production rate of the manufacturer in plant-1 of good unit where γ < 1
(1 − γ)R accumulation rate of residue units from plant-1 to vender
α(1 − γ)R transfer rate of residue units from vender to plant-2 where α < 1
αβ(1 − γ)R production rate of the manufacturer in plant-2 from residue units where β < 1
qm1 (t) inventory level of manufacturer at time t in plant-1
qmd (t) inventory level of manufacturer at time t in vendor
qm2 (t) inventory level of manufacturer at time t in plant-2
Cm selling price per unit item for supplier which is also purchase cost per unit
item for manufacturer
Cr1 selling price per unit item for main product of manufacturer which is also
purchase cost per unit item for retailer-I
Cr2 selling price per unit item for by-product of manufacturer which is also
purchase cost per unit item for retailer-II
Tp1 cycle length of plant-1
286 D. Khatua et al.

Td cycle length of vendor

Tp2 cycle length of plant-2
hm1 holding cost per unit per unit time of manufacturer in plant-1
hd holding cost per unit item per unit time of manufacturer in vendor
hm2 holding cost per unit item per unit time of manufacturer in plant-2
Am setup cost of manufacturer
idm1 idle cost per unit time of manufacturer in plant-1
idm2 idle cost per unit time of manufacturer in plant-2
∗
AP M optimum value of average profit of the manufacturer.

5.2.3 For the retailers

qr1 (t) inventory level of retailer-I at time t
qr2 (t) inventory level of retailer-II at time t
D r1 constant demand rate of retailer-I
D r2 constant demand rate of retailer-II
Dc1 constant demand rate of customers from retailer-I
Dc2 constant demand rate of customers from retailer-II
s1 selling price of unit item of retailer-I
s2 selling price of unit item of retailer-II
Tr1 cycle length of retailer-I
Tr2 cycle length of retailer-II
hr1 holding cost per unit item per unit time of retailer-I
hr2 holding cost per unit item per unit time of retailer-II
Ar1 setup cost of retailer-I
Ar2 setup cost of retailer-II
idr1 idle cost per unit time of retailer-I
idr2 idle cost per unit time of retailer-II
AP R1∗ optimum value of average profit of the retailer-I
AP R2∗ optimum value of average profit of the retailer-II.

5.2.4 For integrated model

R∗ optimum value of R
AT P average profit of the integrated model in crisp environment
∗
AT P optimum value of average profit for the integrated model.
 A green supply chain production inventory model 287

6 Model formulation with crisp cost parameters

In the proposed inventory model, supplier receives the deteriorating items in a lot and
supplies fresh raw materials at the rate R to the manufacturer up to time Ts . The
manufacturer of plant-1 produces the item at the rate γR and residue units of plant-1 are
accumulated in vendor at the rate(1 − γ)R. From this vendor manufacturer of plant-2
takes the residue units at the rate α(1 − γ)R and produces the usable product at the
rate βα(1 − γ)R. Retailer-I purchased the produced item from plant-1 at a rate Dr1 and
retailer-II purchased the produced item from plant-2 at a rate Dr2 Dc1 and Dc2 are the
demands of customer from retailer-I for the time interval [0, Tr1 ] and from retailer-II for
the time interval [0, Tr2 ] respectively. Let qs (t), qm1 (t), qmd (t), qm2 (t), qr1 (t) and qr2 (t)
be the inventory level of the units at time t for the supplier, manufacturer in plant-1,
vendor, plant-2, retailers-I and retailers-II, respectively. Block diagram and behaviour
of inventory levels in plant-1 and plant-2 are shown in Figure 2, Figure 3 and Figure 4
respectively.

Figure 3 The behaviour of inventory level of the model through plant-1

Figure 4 The behaviour of inventory level of the model through plant-2

288 D. Khatua et al.

6.1 Formulation of suppliers individual average profit

The supplier received the deteriorating items in a lot and supplies fresh raw materials
at the rate R to the manufacturer up to time Ts . The constant deterioration rate is θ.
Then the differential equation of the inventory level of suppliers (depicted in Figure 5)
in [0, Ts ] is

dqs
= −R − θqs (t), 0 ≤ t ≤ Ts (6)
dt

with boundary condition qs (0) = Q and qs (Ts ) = 0.

Figure 5 Inventory situation for supplier’s

The solution of equation (7) is,

R ( R ) −θt
qs (t) = − + Q+ e , 0 ≤ t ≤ Ts ,
θ θ

The total cycle length of supplier is

( )
1 θQ
Ts = log 1 + (7)
θ R

Inventory holding cost Hs of supplier is,

∫ Ts ([ ) ]
R R −θt
Hs = hs − + Q+ e
0 θ θ
hs [ ]
= Q − RTs ,
θ

The deteriorating unit =Q − RTs , the purchase cost = Cs Q, the selling price= Cm RTs ,
the idle cost=ids (T − Ts ) and the ordering cost is As .
Average profit for supplier in [0, T ] is,

1
APS = [revenue from sale-purchase cost-holding
T
cost-idle cost-ordering cost.]
[ ]
1 hs
= Cm RTs − Cs Q − [Q − RTs ] − ids [T − Ts ] − As (8)
T θ
 A green supply chain production inventory model 289

6.2 Formulation of manufacturer individual average profit

6.2.1 For plant-1

The manufacturer of plant-1 produced the item at the rate γR in 0 ≤ t ≤ Ts and
Retailer-I purchased the produced item from plant-1 at a rate Dr1 in 0 ≤ t ≤ Tp1 ,
Ts ≤ Tp1 . Then the differential equation of the inventory level for plant-1 (depicted in
Figure 6) in [0, Tp1 ] is
{
dqm1 γR − Dr1 0 ≤ t ≤ Ts
= (9)
dt −Dr1 , Ts < t ≤ Tp1

with boundary condition qm1 (0) = 0 and qm1 (Tp1 ) = 0.

Figure 6 Inventory situation of manufacturer in the plant-1

The solution of equation (10) is,

{
(γR − Dr1 )t, 0 ≤ t ≤ Ts
qm1 (t) =
(Tp1 − t)Dr1 , Ts ≤ t ≤ Tp1
γRTs
Tp1 = , (10)
D r1

Inventory holding cost Hm1 in plant-1 is,

[∫ Ts ∫ Tp1 ]
Hm1 = hm1 (γR − Dr1 )tdt + (Tp1 − t)Dr1 dt
0 T
[ 2 2 2( )] s
γ R Ts 1 1
= hm1 − ,
2 D r1 γR

The idle cost= idm1 (T − Tp1 ), the purchasing cost of item = Cm RTs , and the selling
price = γRTs Cr1 .

Vendor of residue unit of plant-1: The residue units of plant-1 are accumulated in vendor
at the rate (1 − γ)R in 0 ≤ t ≤ Ts . From this vendor manufacturer of plant-2 takes the
residue units at the rate α(1 − γ)R in Ts < t ≤ Td . Then the differential equation of
the inventory level for vendor (depicted in Figure 7) in [0, Td ] is
{
dqmd (t) (1 − α)(1 − γ)R 0 ≤ t ≤ Ts
= (11)
dt −α(1 − γ)R, Ts < t ≤ Td
290 D. Khatua et al.

with boundary condition qmd (0) = 0 and qmd (Td ) = 0.

The solution of equation (12) is,
{
((1 − α)(1 − γ)Rt, 0 ≤ t ≤ Ts
qmd (t) =
α(1 − γ)(Td − t), Ts ≤ t ≤ Td
Ts
Td = , (12)
α

Figure 7 Inventory situation of vendor of residue unit in plant-1

Inventory holding cost Hmd in vendor is,

[∫ Ts ∫ Td ]
and Hmd = hmd ((1 − α)(1 − γ)Rtdt + α(1 − γ)(Td − t)dt
0 Ts
[ ]
(1 − α)(1 − γ)RTs2
= hmd
2α

6.2.2 For plant-2

In plant-2, the usable product is produced at the rate βα(1 − γ)R in 0 ≤ t ≤ Td .
Retailer-II purchased the produced item from plant-2 at a rate Dr2 in Td < t ≤ Tp2 .
Then the differential equation of the inventory level for plant-2 (depicted in Figure 8)
in [0, Tp2 ] is
{
dqm2 αβ(1 − γ)R − Dr2 0 ≤ t ≤ Td
= (13)
dt −Dr2 , Td < t ≤ Tp2

with boundary condition qm2 (0) = 0 and qm2 (Tp2 ) = 0.

Figure 8 Inventory situation of manufacturer in plant-2

 A green supply chain production inventory model 291

The solution of equation (14) is,

{( )
αβ(1 − γ)R − Dr2 t, 0 ≤ t ≤ Td
qm2 (t) =
(Tp2 − t)Dr2 , Td ≤ t ≤ Tp2
β(1 − γ)RTs
Tp2 = , (14)
D r2

Inventory holding cost Hm2 in plant-2 is,

[∫ (
Td ) ∫ Tp2 ]
Hm2 = hm2 αβ(1 − γ)R − Dr2 tdt + (Tp2 − t)Dr2 dt
0 Td
[ ]
β 2 (1 − γ)2 R2 Ts2 1 1
= hm2 − ,
2 D r2 αβ(1 − γ)R

The idle cost= idm2 (T − Tp2 ), the selling price = β(1 − γ)RTs Cr2 , and the ordering
cost = Am .
Average profit for manufacturer in [0, T ] is,

1
APM = [revenue from sale-purchase cost-holding
T
cost-idle cost-ordering cost.]
[
1
= γRTs Cr1 + β(1 − γ)RTs Cr2 − cm RTs
T
( )
γ 2 R2 Ts2 1 1
− hm1 −
2 D r1 γR
( )
(1 − γ)2 β 2 R2 Ts2 1 1
− hm2 −
2 D r2 αβ(1 − γ)R
hmd (1 − α)(1 − γ)RTs2
−
2α ]
−idm1 (T − Tp1 ) − idm2 (T − Tp2 ) − Am . (15)

6.3 Formulation of retailer individual average profit

6.3.1 For Retailer-I

Dc1 is the demands of customer from retailer-I for the time interval [0, Tr1 ]. Then the
differential equation of the inventory level for retailer-I (depicted in Figure 9) in [0, Tr1 ]
is
{
dqr1 Dr1 − Dc1 0 ≤ t ≤ Tp1
= (16)
dt −Dc1 , Tp1 < t ≤ Tr1

with boundary condition qr1 (0) = 0 and qr1 (Tr1 ) = 0.

292 D. Khatua et al.

Figure 9 Inventory situation of retailer-I

The solution of equation (17) is,

{
(Dr1 − Dc1 )t, 0 ≤ t ≤ Tp1
qr1 (t) =
Dc1 (Tr1 − t), Tp1 ≤ t ≤ Tr1
γRTs
Tr1 = , (17)
Dc1

Inventory holding cost Hr1 of retailer-I is,

[∫ Tp1 ∫ Tr1 ]
Hr1 = hr1 (Dr1 − Dc1 )tdt + Dc1 (Tr1 − t)dt
0 Tp1
[ ]
γ 2 R2 Ts2 1 1
= hr1 − ,
2 Dc1 Dr1

The idle cost = idr1 (T − Tr1 ), the purchase cost = γRTs Cr1 , the selling price=
γRTs s1 , and the ordering cost= Ar1 .
Average profit for retailer-I in [0, T ] is,

1
AP R1 = [revenue from sale-purchase cost-holding
T
cost-idle cost-ordering cost.]
[ ( )
1 γ 2 R2 Ts2 1 1
= γRTs (s1 − cr1 ) − hr1 −
T 2 Dc1 Dr1
]
− idr1 (T − Tr1 ) − Ar1 . (18)

6.3.2 For Retailer-II

Dc2 is the demands of customer from retailer-II for the time interval [0, Tr2 ]. Then
the differential equation of the inventory level for retailer-II (depicted in Figure 10) in
[0, Tr2 ] is
{
dqr2 Dr2 − Dc2 0 ≤ t ≤ Tp2
= (19)
dt −Dc2 , Tp2 < t ≤ Tr2

with boundary condition qr2 (0) = 0 and qr2 (Tr2 ) = 0.

 A green supply chain production inventory model 293

Figure 10 Inventory situation of retailer-II

The solution of equation (20) is,

{
(Dr2 − Dc2 )t, 0 ≤ t ≤ Tp2
qr2 (t) =
Dc2 (Tr2 − t), Tp2 ≤ t ≤ Tr2
β(1 − γ)RTs
Tr2 = , (20)
Dc2

Inventory holding cost Hr2 of retailer-II is,

[∫ Tp2 ∫ Tr2 ]
Hr2 = hr2 (Dr2 − Dc2 )tdt + Dc2 (Tr2 − t)dt
0 Tp2
[ ]
β (1 − γ) R
2 2 2
Ts2 1 1
= hr2 − ,
2 Dc2 D r2

idle cost= idr2 (T − Tr2 ), purchase cost = β(1 − γ), RTs Cr2 , selling
price = β(1 − γ)RTs s2 , and ordering cost is Ar2 .
Average profit for retailer-II in [0, T ] is,

1
AP R2 = [revenue from sale-purchase cost-holding
T
cost-idle cost-ordering cost].
[ ( )
1 β 2 (1 − γ)2 R2 Ts2 1 1
= β(1 − γ)RTs (s2 − cr2 ) − hr2 −
T 2 Dc2 Dr2
]
− idr2 (T − Tr2 ) − Ar2 (21)

6.4 Integrated model

In this study, the integrated three-stage supply chain production/by-production inventory

model is developed.
294 D. Khatua et al.

6.4.1 Crisp environment

The integrated system’s average profit is
ATP = AP S + AP M + AP R1 + AP R2
[ ]
1 hs
= Cm RTs − Cs Q − Q − RTs − ids (T − Ts ) − As
T θ
[
1
+ γRTs Cr1 + β(1 − γ)RTs Cr2
T
( )
hm1 γ 2 R2 Ts2 1 1
− cm RTs − −
2 D r1 γR
( )
hm2 (1 − γ) R Ts
2 2 2
1 1
− −
2 D r2 αβ(1 − γ)R
hmd (1 − α)(1 − γ)RTs 2
− − idm1 (T − Tp1 )
2α ] [
1
−idm2 (T − Tp2 ) − Am + γRTs (s1 − cr1 )
T
( ) ]
γ 2 R2 Ts2 1 1
− hr1 − − idr1 (T − Tr1 ) − Ar1
2 Dc1 D r1
[
1
+ β(1 − γ)RTs (s2 − cr2 )
T
( ) ]
β 2 (1 − γ)2 R2 Ts2 1 1
− hr2 − − idr2 (T − Tr2 ) − Ar2 (22)
2 Dc2 D r2
Case-I: When Tr1 > Tr2 then T = max[Tr1 , Tr2 ]=Tr1 and using equation (23) takes
form
[ ( 2( ( ) )
Dc1 2 2 γ 1 1 hm1
ATP = − R Ts hr1 − +
γRTs 2 Dc1 Dr1 Dr
( ( ) )) 1
β (1 − γ)
2 2
1 1 hm2
+ hr2 − +
2 Dc2 D r2 Dr
( ( ) 2
idm2 idr2
+ RTs β(1 − γ) s2 + +
D r2 Dc2
( ( ) ))
hs ids 1 1 idm2 idr2
+ γ s1 + − − idm1 − − −
θ Dc1 Dc1 Dr1 Dc1 Dc1
( )
γhm1 (1 − γ)
+ RTs2 + (βhm2 − hmd (1 − α))
2 2α
]
hs Q
+ ids Ts − cs Q − − (As + Am + Ar1 + Ar2 ) (23)
θ
Test for optimality: Using series expansion equation (8) becomes,
[ ]
Q θQ
Ts ≈ 1− , (since θ < 1) (24)
R 2R
[ ]
1 R θQ θ2 Q2
and ≈ 1+ + (25)
Ts Q 2R 4R2
 A green supply chain production inventory model 295

Using the above results, equation (24) can be written as

ids D
ATP = −ARTs + B + CTs + −
R RTs
( ) ( )
D AθQ2 D 1
= − AQ + B − + + CQ + ids −
Q 2 2 R
( 2 2
)
CθQ Dθ Q 1
− +
2 4 R2
X Y
= 2 + +Z
R R

where
[ ( ( ) )
Dc1 γ 2 1 1 hm1
A= hr1 − +
γ 2 Dc D r1 D r1
( 1( ) )]
β (1 − γ)
2 2
1 1 hm2
+ hr2 − + ,
2 Dc2 D r2 Dr2
[
Dc1 idm2 idr2
B = β(1 − γ)(s2 + + )
γ D r2 Dc2
( ( ) )]
hs ids 1 1 idm2 idr2
+ γ s1 + − − idm1 − − − ,
θγ Dc1 Dc1 D r1 Dc1 Dc1
[ ( )]
Dc1 γhm1 (1 − γ)
C = + βhm2 − hmd (1 − α) ,
γ 2 2α
[ ]
Dc1 hs Q
D = cs Q + + (As + Am + Ar1 + Ar2 ) ,
γ θ
( 2
)
CθQ Dθ2 Q
X =− + ,
2 4
AθQ2 D D
Y = + CQ + ids − and Z = −AQ + B −
2 2 Q

For optimal value of ATP, we have

dAT P −2X Y −2X

=0⇒ 3
− 2 =0⇒R= = R∗ (say)
dR
[ 2 ] R R Y
d AT P Y4
⇒ = < 0. if X < 0
dR2 R= −2X 8X 3
Y

Therefore ATP is concave if

( )
CθQ2 Dθ2 Q
X=− + < 0. (26)
2 4

Substituting the value of R = R∗ in (24) we get the optimum value of ATP, say AT P ∗ .
296 D. Khatua et al.

Case-II: When Tr2 > Tr1 then T=max[Tr1 , Tr2 ]=Tr2 and using equation (23) takes
form
[ ( 2( ( ) )
Dc2 γ 1 1 hm1
ATP = − R2 Ts2 hr1 − +
β(1 − γ)RTs 2 Dc1 Dr D r1
2(
( ) ) 1
β (1 − γ)
2
1 1 hm2 )
+ hr2 − +
2 Dc2 D r2 D r2
( ( ( ) )
1 1 idm1 idr1 ids
+ RTs β(1 − γ) s2 + idm2 − − − −
Dc D r2 Dc2 Dc2 Dc2
)) 2
( hs idr1 idm1
+ γ s1 + + −
θ Dc1 D r1
( )
γhm1 (1 − γ)
+ RTs2 + (βhm2 − hmd (1 − α))
2 2α
]
hs Q
+ ids Ts − cs Q − − (As + Am + Ar1 + Ar2 ) (27)
θ

Test for optimality: Using equation (25) and (26) in equation (28) we get

ids D
ATP = −ARTs + B + CTs + −
R RTs
( ) ( )
D AθQ2 D 1
= − AQ + B − + + CQ + ids −
Q 2 2 R
( 2 2
)
CθQ Dθ Q 1
− +
2 4 R2
X Y
= 2 + +Z (28)
R R
where
( 2
Dc2 γ ( 1 1 hm1 )
A= hr1 ( − )+
β(1 − γ) 2 Dc D r1 D r1
( ( 1 ) ))
β (1 − γ)
2 2
1 1 hm2
+ hr2 − + ,
2 Dc2 D r2 Dr2
[ ( ( )
Dc2 1 1 idm1
B = β(1 − γ) s2 + idm2 − −
β(1 − γ) Dc2 Dr2 Dc
) ( )] 2
idr1 ids hs idr1 idm1
− − + γ s1 + + − ,
Dc2 Dc2 θγ Dc1 Dr1
[ ( )]
Dc2 γhm1 (1 − γ)
C = + βhm2 − hmd (1 − α) ,
β(1 − γ) 2 2α
[ ]
Dc2 hs Q
D = cs Q + + (As + Am + Ar1 + Ar2 ) ,
β(1 − γ) θ
( 2 2
)
CθQ Dθ Q
X =− + ,
2 4
AθQ2 D D
Y = + CQ + ids − and Z = −AQ + B − .
2 2 Q
 A green supply chain production inventory model 297

For optimal value of ATP, we have

dAT P −2X Y −2X

=0⇒ 3
− 2 =0⇒R= = R∗ (say)
dR
[ 2 ] R R Y
d AT P Y4
⇒ 2
= < 0. if X < 0.
dR R= −2X 8X 3
Y

Therefore ATP is concave if

( )
CθQ2 Dθ2 Q
X=− + < 0. (29)
2 4

Substituting the value of R∗ in (29) we get the optimum value of AT P ∗ .

6.4.2 Uncertain environment

In this environment, we have considered all holding cost as uncertain variables.
∮ Then
the crisp model in equation (23) becomes uncertain model and the using article 3, the
corresponding uncertain objective function is

Max (ATˆ P )
[ ]
1 ĥs
= Cm RTs − Cs Q − Q − RTs − ids (T − Ts ) − As
T θ
[
1
+ γRTs Cr1 + β(1 − γ)RTs Cr2 − cm RTs )
T
( ( )
ĥm1 γ 2 R2 Ts2 1 1 1 1
− ( −
2 Dr1 Dr1 γR Dr1
( )
ĥm2 (1 − γ) R Ts
2 2 2
1 1 ĥmd (1 − α)(1 − γ)RTs2
− − −
2 D r2 αβ(1 − γ)R 2α
]
− idm1 (T − Tp1 ) − idm2 (T − Tp2 ) − Am
[ ( )
1 γ 2 R2 Ts2 1 1
+ γRTs (s1 − cr1 ) − ĥr1 −
T 2 Dc1 D r1
] [
1
− idr1 (T − Tr1 ) − Ar1 + β(1 − γ)RTs (s2 − cr2 )
T
( ) ]
β 2 (1 − γ)2 R2 Ts2 1 1
− ĥr2 − − idr2 (T − Tr2 ) − Ar2 (30)
2 Dc2 Dr2

(here ˆ denotes the uncertain parameters).

Where uncertain variables ĥs , ĥm1 , ĥm2 , ĥmd , ĥr1 and ĥr2 are defined as follows,

ĥs = (hs1 , hs2 , hs3 ), ĥm1 = (hm11 , hm12 , hm13 ),

ĥm2 = (hm21 , hm22 , hm23 ), ĥmd = (hmd1 , hmd2 , hmd3 ),
ĥr1 = (hr11 , hr12 , hr13 ), v ĥr2 = (hr21 , hr22 , hr23 )
298 D. Khatua et al.
∮
The equivalent crisp model: Using Theorems 1 and 2, and Lemma 1 in article 3, the
uncertain model in equation (30) becomes a crisp model as follows

Max E[ATˆ P ]
[ ]
1 E[ĥs ]
= Cm RTs − Cs Q − Q − RTs − ids (T − Ts ) − As
T θ
[
1 E[ĥm1 ]γ 2 R2 Ts2
+ γRTs Cr1 + β(1 − γ)RTs Cr2 − cm RTs −
T 2
( ) ( )
1 1 E[ĥm2 ](1 − γ) R Ts
2 2 2
1 1
− − −
Dr1 γR 2 D r2 αβ(1 − γ)R
]
E[ĥmd ](1 − α)(1 − γ)RTs2
− − idm1 (T − Tp1 ) − idm2 (T − Tp2 ) − Am
2α
[ ( )
1 γ 2 R2 Ts2 1 1
+ γRTs (s1 − cr1 ) − E[ĥr1 ] − − idr1 ](T − Tr1 )
T 2 Dc1 D r1
] [
1
− Ar1 ] + β(1 − γ)RTs (s2 − cr2 )
T
( ) ]
β 2 (1 − γ)2 R2 Ts2 1 1
− E[ĥr2 ] − − idr2 ](T − Tr2 ) − Ar2 ]
2 Dc2 D r2
∮
where (using Lemma 1 in 3)

hs1 + 2hs2 + hs3

E[ĥs ] = ,
4
hm11 + 2hm12 + hm13
E[ĥm1 ] = ,
4
hm21 + 2hm22 + hm23
E[ĥm2 ] =
4
hmd1 + 2hmd2 + hmd3
E[ĥmd ] = ,
4
hr + 2hr12 + hr13
E[ĥr1 ] = 11 ,
4
hr + 2hr22 + hr23
E[ĥr2 ] = 21 (31)
4

7 Numerical example and practical implication

In this section, we consider an example of a three layer supplier chain having one
supplier, one manufacturer in plant-1 and another by-production centre in plant-2 and
two retailers.

7.1 Numerical example

The input dates for different parameters of crisp model are given in Table 1 and
corresponding optimal results are given in Table 2. Average total profit (ATP)
 A green supply chain production inventory model 299

corresponding to supply rate (R) of supplier are given graphically in Figure 11.
Sensitivities analysis of α for cases-I and -II are given in Tables 3 and 4 respectively.

Table 1 Input data for different parameter in crisp model for case-I and case-II

Parameter Case-I Case-II Parameter Case-I Case-II

cs 20 20 γ 0.6 0.6
cm 30 30 Q 3,000 3,000
cr1 50 50 Dr1 150 150
cr2 25 25 Dr2 70 70
s1 60 60 Dc1 90 90
s2 35 35 Dc2 55 50
hs 0.1 0.1 ids 10 10
hm 1 1.5 1.5 idm1 50 50
hm 2 0.9 0.9 idm2 50 50
hm d 0.6 0.6 idr1 20 20
hr1 1.6 1.6 idr2 20 20
hr2 1.6 1.6 As 300 300
θ .07 .07 Am 400 400
β 0.9 0.9 Ar1 200 200
α 0.6 0.6 Ar2 100 100

Table 2 Optimal values of R, ATP, APM, AP R1 and AP R2 in crisp model of case-I and
case-II

Parameter Case-I Case-II Parameter Case-I Case-II

∗
R 372.92 353.64 Tr∗1 15.8646 15.7052
AT P ∗ 2,422.93 2172.18 Tr∗2 15.5762 16.9635
AP S ∗ 637.25 549.86 AP M ∗ 966.04 920.59
AP R1∗ 430.49 401.40 AP R2∗ 389.14 300.33

Figure 11 Average profit versus supply rate of supplier’s in case-I and case-II
300 D. Khatua et al.

Table 3 Sensitivity analysis of α for case-I

α AT P ∗ Tr∗1 R∗ AP S AP M AP R1 AP R2
.56 2,427.74 15.8149 366.96 624.53 981.76 431.88 389.57
.58 2,425.25 15.8406 370.02 631.11 973.62 431.17 389.35
.60 2,422.93 15.8646 372.92 637.25 966.04 430.49 389.14
.62 2,420.77 15.8871 375.67 642.99 958.97 429.86 388.95
.64 2,418.77 15.9083 378.29 648.37 952.36 429.27 388.76
.66 2,416.89 15.9282 380.77 653.43 946.16 428.71 388.59

Table 4 Sensitivity analysis of α for case-II

α AT P ∗ Tr∗2 R∗ AP S AP M AP R1 AP R2
.56 2,176.83 16.9032 348.27 538.15 935.12 402.66 300.90
.58 2,174.42 16.9302 351.03 544.21 927.60 402.01 300.61
.60 2,172.18 16.9554 353.64 549.86 920.59 401.40 300.32
.62 2,170.01 16.9791 356.11 555.14 914.06 400.84 300.06
.64 2,168.16 17.0013 358.46 560.10 907.94 400.30 299.82
.66 2,166.34 17.0223 360.69 564.75 902.21 399.80 299.58

From Table 2, it is observed that optimal individual profits for the supplier, manufacturer
and retailers are better in case-I (i.e., when Tr1 > Tr2 ) than case-II (i.e., when
Tr1 < Tr2 ). Sensitivity analysis shows from Tables 3 and 4 that the profit of the
integrated model and individual profit of the supplier increase with the increase of α but
the individual profits of the manufacturer and the retailers are decreased with increase
of α. Concave nature of the integrated model is shown analytically and graphically for
the both cases: case-I and case-II.

7.2 Practical implication

We have studied study the M/S Renuka Sugar Mill to collect the different data at
the state of West Bengal in India. M/S Ghosh Enterprises supplies the sugar-canes
(which deteriorates with constant rate) to M/S Renuka sugar mill as raw materials. M/S
Renuka Sugar Mill have two plants: plant-1 and plant-2 in the same premises. In plant-1,
the production of sugar produced from sugar-cane and the residue of sugar-canes of
plant-1 produces a special type of wine in plant-2. Two types of retailers (retailer-1 and
retailer-2) purchase sugar and wine from respective plants and the market demand of
both of the products are fulfilled from the retailers. It is observed from the collected
data of supplier, manufacturer and retailers that some of the data behave as like crisp
and some are uncertain.
In our case study of Renuka Sugar Mill, the holding costs, are not constant due
to the scarcity of storage space, market demand, market fluctuation, human estimation/
thought process, bank interest rate, inflation, etc. So these costs are uncertain variable.
Other inventory parameters remain crisp in the said sugar mill. The followings are the
collected data (Tables 5 and 6).
 A green supply chain production inventory model 301

Table 5 Collected data for different crisp parameters

Parameter Value Parameter Value

cs 20 γ 0.6
cm 30 Q 3, 000
cr1 50 Dr 1 150
cr2 25 Dr 2 70
s1 60 Dc1 90
s2 35 Dc2 55
θ .07 β 0.9
α 0.6 ids 10
idm1 50 idm2 50
idr1 20 idr2 20
As 300 Am 400
Ar1 100 Ar2 100

Table 6 Collected data for all uncertain holding costs

Input all uncertain holding costs Expected value by using equations (32) and (33)
ĥs = (0.099, 0.101, 0.13) E[ĥs ]= 0.11
ĥm1 = (1.491, 1.50, 1.513) E[ĥm1 ]= 1.51
ĥm2 = (1.391, 1.40, 1.413) E[ĥm2 ]= 1.41
ĥmd = (0.50, 0.505, 0.529) E[ĥmd ]= 0.5075
ĥr1 = (1.50, 1.52, 1.56) E[ĥr1 ]= 1.525
ĥr2 = (1.40, 1.42, 1.44) E[ĥr2 ]= 1.422

It is observed from the result that the∮ optimum values of Tr1 = 15.9092 >
Tr2 = 15.6199, satisfies the case-I in 5.4.2 and the optimum results are given
numerically in Table 7.

Table 7 Optimal values of R, ATP, APM, AP R1 and AP R2 in equivalent crisp model

Parameter Value Parameter Value

∗
R 378.40 Tr∗1 15.9092
AT P ∗ 2,425.03 Tr∗2 15.6199
AP S ∗ 647.92 AP M ∗ 957.67
AP R1∗ 430.05 AP R2∗ 389.40

8 Conclusions

In this model, we have developed production and by-production inventory problem

under uncertain environment. Residue units of production centre increases the pollution
of our environment day by day. To minimise the environmental pollution from
these residue units, manufacturer incurred a cost to destroy the polluted units. So
by-production of these residue units of production centre not only minimises the
302 D. Khatua et al.

environmental pollution, but also it gives some return to the manufacturer. Now a days
some researcher investigate continuously to control the pollution through by-production
of residue products of plant-1. We have analysed the collected data from sugar mill to
understand the said model. Also this model is applicable in Thermal power plant where
residue units like ash in Thermal power plant are taken as the raw materials of brick
industries in which not only increases the profit of the manufacturer but also minimise
the environmental pollution.
So the unique contribution of this paper are given below:

1 development of the three stage integrated production and by-production inventory

model with uncertain holding cost
2 reduction of the environmental pollution from residue units.

This paper can be extended to imperfect production inventory system. Deterioration can
be allowed for produced items of manufacturer and also in case of retailer. To make
the model more realistic, several features like dynamic demand, dynamic production,
random defectiveness, imprecise budget constraint, etc have been considered for the
present model. Some more real-life features such as inflation, present value of money,
ramp type demand, etc., may be incorporated for the future research work.

Acknowledgements

The first author, Mr. D. Khatua thanks Ms. Nirmala Kaur, Lecturer in English, Global
institute of Science and Technology for helping to improve the language of the paper.

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