Title: Investigating the effect of inflation on an inventory system for defective items with inspection errors, sales returns and shortages

Authors: Aditi Khanna; Aakanksha Kishore

Addresses: Faculty of Mathematical Sciences, Department of Operational Research, University of Delhi, New Academic Block, Delhi 110007, India ' Faculty of Mathematical Sciences, Department of Operational Research, University of Delhi, New Academic Block, Delhi 110007, India

Abstract: The present paper addresses the common quality related issues faced by retail sectors i.e., the presence of imperfect quality received in the lot. For delivering perfect products to the buyers, all products get inspected to select the perfect items for demand fulfilment. However, during the inspection process, it is observed that the occurrence of common human errors, viz. Type-I & Type-II, is inescapable. The former error causes monetary damage to the retailer whereas Type-II error brings dissatisfaction in customers by supplying them defectives by mistake. Further, the impact of inflationary conditions has been considered for accurate calculation of various cost components. Fully backlogged shortages are also considered in modelling. Thus, objective of the proposed model lies in determining the optimal backorder level and order quantity by maximising present worth of expected profit function. Practical relevance of the study is established via 'numerical' as well as comprehensive 'sensitivity analysis'.

Keywords: inventory; imperfect quality items; inspection; inflation; shortages; type-I error; type-II error.

DOI: 10.1504/IJSOI.2021.117255

International Journal of Services Operations and Informatics, 2021 Vol.11 No.2/3, pp.260 - 279

Received: 03 Apr 2020
Accepted: 03 Aug 2020
Published online: 26 Aug 2021 *

Full-text access for editors Full-text access for subscribers Purchase this article Comment on this article