Title: Optimal inventory cycle in a two-stage supply chain incorporating imperfect items from suppliers

Authors: Mehmood Khan, Mohamad Y. Jaber

Addresses: Department of Mechanical and Industrial Engineering, Ryerson University, Toronto, Ontario M5B 2K3, Canada. ' Department of Mechanical and Industrial Engineering, Ryerson University, Toronto, Ontario M5B 2K3, Canada

Abstract: In this paper, a two-level supply chain situation is considered. A manufacturer/vendor is assumed to receive raw material parts from a number of suppliers for assembling a single product. The parts obtained from the supplier are not of a perfect quality. That is, each supplier may have an approximately fixed percentage of defectives in the lots supplied. An inspection process is carried out at the vendor|s end to take out these imperfect parts while manufacturing the product. A different percentage of defectives from each supplier gives rise to some unused parts left with the vendor in each cycle. These parts are utilised in the next cycle. Different coordination mechanisms for controlling the supply chain inventory are studied. A cost minimisation model is given for each. A numerical example is given to compare the coordination mechanisms.

Keywords: EPQ; EMQ; imperfect quality; supply chain coordination; learning curve; supply chain management; SCM; imperfect parts; defective parts; supply chain inventory; inventory control; economic production quantity; economic manufacturing quantity.

DOI: 10.1504/IJOR.2011.039712

International Journal of Operational Research, 2011 Vol.10 No.4, pp.442 - 457

Available online: 14 Apr 2011 *

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