Authors: Sraboni Mandal; Danish Ali Khan
Addresses: Department of Computer Applications, National Institute of Technology, Jamshedpur, Pin 831014, India ' Department of Computer Applications, National Institute of Technology, Jamshedpur, Pin 831014, India
Abstract: This article investigates the problems in inventory system and develops a model, integrated vendor-customer inventory policy for items with imperfect quality also with inspection errors and shortage cost. Quantity of delivered items to the customer is identical at each shipment. Production process is imperfect and it may produce certain number of defective items. Screening process is conducted at the customer's end, but the inspector may incorrectly classify a non-defective item as defective or incorrectly classify a defective item as non-defective. Integrated total cost of the vendor and the customer is calculated to provide the optimal solution. Each lot contains a variable number of defective items and completely backordered, shortages are permitted. The objective is to minimise the total costs. An impressive cost reduction is shown through integrated model in comparison to an independent decision, with the help of numerical examples.
Keywords: joint economic lot size; total relevant cost; absolute cost; quantity discount; inspection errors; shortage costs; integrated modelling; inventory modelling; uniform demand; inventory policy; imperfect quality; cost reduction.
International Journal of Business Performance and Supply Chain Modelling, 2015 Vol.7 No.1, pp.36 - 52
Received: 20 Mar 2013
Accepted: 25 Sep 2013
Published online: 16 Mar 2015 *