Title: Revisit economic ordering strategy for items with imperfect quality and backordering

Authors: Hui-Ming Teng; Ping-Hui Hsu

Addresses: Department of Business Administration, Chihlee Institute of Technology, New Taipei, 22005, Taiwan ' Department of Business Administration, De Lin Institute of Technology, New Taipei, 23654, Taiwan

Abstract: Most studies assume that poor quality items are kept in stock and sold at a discounted price at the end of each period, and there will be no shortage within the screening time. This is not usually done in practice. Therefore, we revisit Maddaha and Jaber's model (2008) and apply the renewal theory to develop an economic ordering strategy by considering backorders. Pricing model for defective items is developed based on the retailer's perspective. Numerical examples are provided to demonstrate that in order to be sure there is no shortage case within the screening time, defective percentage should be restricted.

Keywords: imperfect quality; pricing models; renewal theory; defective items; shortages; economic ordering strategy; backordering; screening time; discounted prices.

DOI: 10.1504/IJMED.2013.054521

International Journal of Management and Enterprise Development, 2013 Vol.12 No.3, pp.251 - 262

Received: 11 Apr 2012
Accepted: 13 Jan 2013

Published online: 26 Jul 2014 *

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