Title: An integrated vendor-buyer inventory model with defective items and partial backlogging

Authors: Chia-Huei Ho, Suresh Kumar Goyal, Liang-Yuh Ouyang, Kun-Shan Wu

Addresses: Graduate School of Management, Ming Chuan University, 250 Zhong Shan N. Road, Taipei 111, Taiwan. ' Department of Decision Sciences and Management Information Systems, John Molson School of Business, Concordia University, 1455 De Maisonneuve Blvd. West, Montreal Que., H3G 1M8, Canada. ' Department of Management Sciences and Decision Making, Tamkang University, Tamsui, Taipei 251, Taiwan. ' Department of Business Administration, Tamkang University, Tamsui, Taipei 251, Taiwan

Abstract: This paper investigates the integrated vendor-buyer inventory model in which each buyer|s arrival order lot contains a random proportion of defective items and the lead-time demand in the market has a normal distribution. The inspection strategy adopted here is that the buyer inspects all the items before selling, allowing defective items to be discovered and returned to the vendor. We formulated an integrated vendor-buyer inventory model with partial backlogging, in which the order quantity, reorder point and the number of shipments from the vendor to the buyer are decision variables. An algorithm was developed to obtain the optimal production and inventory strategy. Furthermore, the affect of parameters on the optimal solution is also discussed.

Keywords: integrated inventories; inventory models; defective items; partial backlogging; backlogs; defects; vendors; buyers; arrival orders; order lots; lead-time demand; markets; normal distribution; inspection strategies; order quantities; reorder points; shipment numbers; decision variables; optimal solutions; production strategies; inventory strategies; parameters; logistics systems; logistics management.

DOI: 10.1504/IJLSM.2011.039596

International Journal of Logistics Systems and Management, 2011 Vol.8 No.4, pp.377 - 391

Published online: 06 May 2015 *

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