Supply chain system with deteriorating items and transportation cost with environmental consideration has recently become a popular research stream. This study revisits a supply chain system with deteriorating items and transportation cost. Processing the defective items, which increases cost, affects supply chain decisions. We present an integrated inventory model involving a three-stage supply chain and defective items with no shortage. We then derive the minimal total cost considering supply

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... chain integration and deteriorating items. Numerical examples are provided to illustrate how these models can be applied in practice. Sensitivity analysis is performed to gain more insight on changing parameters in the numerical studies.