Two‐echelon supply chain with selling price dependent demand under wholesale price index and consumer price index

In recent Indian economic scenario, consumer price index (CPI) at the retailer is escalated very high where‐as wholesale price index (WPI) at the manufacturer reduced very low, especially in the case of essential commodities. Under these circumstances, illustrating the effect of reduced WPI and increased CPI on the gross profit of the supply chain as well as at individual echelons is worthwhile in taking inventory decisions. In this paper, a model for a two echelon supply chain under WPI and CPI with price dependent demand is developed to analyse the variation of optimal gross profit, cycle time, average inventory levels and total relevant costs of inventory of both the manufacturer and retailer, with and without coordination. Numerical results are presented to demonstrate the application of the model developed. Results show that gross profit of the retailer increases significantly where as that of manufacturer reduces with decrease in WPI and increase in CPI, while overall gross profit of the supply chain increases.