Title: The influence of different quantity discounts on integrated supplier-retailer inventory model

Authors: Yu-Jen Lin; Shwu-Huey Lin

Addresses: Department of Industrial Engineering and Management, St. John's University, Tamsui, New Taipei City 25135, Taiwan ' Department of Finance and Actuarial Science, Aletheia University, Tamsui, New Taipei City 25103, Taiwan

Abstract: This paper investigates an integrated inventory model with defective items where the supplier will offer different quantity discounts to the retailer by different defective rate. We consider the supplier has to offer all-units quantity discount to retailer, as the retailer inspects the receiving items are too highly defective rate. Otherwise, the supplier offers price-break quantities discount to the retailer. Our objective is to determine the optimal order quantity of the retailer and the optimal number of shipment per production run from the supplier to the retailer, so that the joint total profit has a maximum value. An algorithm is developed to find the optimal solution. Two examples are provided to illustrate the theoretical results, and the management insight is presented to demonstrate from the numerical examples.

Keywords: integrated inventory system; quantity discount; defective items.

DOI: 10.1504/IJISE.2018.10016495

International Journal of Industrial and Systems Engineering, 2018 Vol.30 No.3, pp.329 - 345

Received: 23 Mar 2016
Accepted: 12 Nov 2016

Published online: 09 Oct 2018 *

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