Title: An integrated inventory model for supplier-manufacturer-retailer system with imperfect quality and inspection errors

Authors: Wakhid Ahmad Jauhari; Amanda Sofiana; Nughthoh Arfawi Kurdhi; Pringgo Widyo Laksono

Addresses: Department of Industrial Engineering, Sebelas Maret University, Jl. Ir Sutami 36 A, Surakarta 57126, Indonesia ' Production System Laboratory, Department of Industrial Engineering, Sebelas Maret University, Jl. Ir Sutami 36 A, Surakarta 57126, Indonesia ' Department of Mathematics, Faculty of Mathematics and Natural Science, Sebelas Maret University, Jl. Ir Sutami 36 A, Surakarta 57126, Indonesia ' Department of Industrial Engineering, Sebelas Maret University, Jl. Ir Sutami 36 A, Surakarta 57126, Indonesia

Abstract: This paper develops an integrated inventory model for a three-stage supply chain system consisting of single-supplier, single-manufacturer, and single-retailer. The demand is deterministic and the production process is imperfect and produces a certain number of defective items. The retailer conducts an inspection process to screen out the defective items from the shipment lot. The inspector may incorrectly classify non-defective item as defective or incorrectly classify a defective item as non-defective. This model provides an optimal solution for the expected integrated total annual cost. A numerical example is presented for illustrative purpose.

Keywords: supply chain management; SCM; integrated inventory modelling; three-stage systems; imperfect quality; inspection errors; supplier-manufacturer-retailer systems; defective items; total annual cost.

DOI: 10.1504/IJLSM.2016.076893

International Journal of Logistics Systems and Management, 2016 Vol.24 No.3, pp.383 - 407

Received: 01 Apr 2015
Accepted: 02 Jun 2015

Published online: 06 Jun 2016 *

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