Title: Defective item inventory model with remanufacturing or replenishing in an integrated supply chain

Authors: Chi-Chung Lin; Chun-Wei Lin

Addresses: Department of Industrial Engineering and Management, National Yunlin University of Science and Technology, No. 123, University Road, Douliou City, Yunlin County 64002, Taiwan. ' Department of Industrial Engineering and Management, National Yunlin University of Science and Technology, No. 123, University Road, Douliou City, Yunlin County 64002, Taiwan

Abstract: In this study, we derive a coordination mechanism for three cases of manufacturer and buyer integration and one case of green supply chain management for a single product. We consider the case of defective items that have been inspected by a buyer, taking into consideration batch processing and product replenishment, in order to satisfy the buyer's demands. A centralised system is designed to minimise the total variable cost per unit time. We then develop theorems to determine the optimal ordering policies and provide bounds to obtain the optimal number of deliveries in order to develop an algorithm. Numerical examples reveal our optimisation procedure to be effective. We also find that the adoption of integrated strategies can result in a lower joint cost compared to the adoption of a stand-alone strategy. Cost saving due to coordination is shared as a result of agreement between all involved parties.

Keywords: supply chain management; SCM; coordination mechanisms; defective products; delivery time; just-in-time; JIT; inventory modelling; remanufacturing; replenishing; supply chain integration.

DOI: 10.1504/IJISM.2011.044889

International Journal of Integrated Supply Management, 2011 Vol.6 No.3/4, pp.254 - 269

Received: 07 Sep 2011
Accepted: 14 Sep 2011
Published online: 15 Jan 2012 *

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