Volume 52, Number 4, October–December 2018
|Page(s)||1277 - 1293|
|Published online||05 December 2018|
Vendor-buyer integrated production-inventory system for imperfect quality item under trade credit finance and variable setup cost
Department of Mathematics, Indian Institute of Technology Kharagpur,
2 Department of Mathematics, National Institute of Technology Agartala, Agartala 799046, India.
* Corresponding author: firstname.lastname@example.org
Accepted: 31 January 2018
This paper model a vendor-buyer integrated production-inventory system by considering issues of imperfect quality of the item, trade credit finance, setup cost reduction and shortages including partial backlogging and lost sale. The vendor produces a lot in one production setup and sends to the buyer in multiple shipments to fulfill customers’ demand. Due to imperfect production and/or unsafe transportation, the received lot of the buyer contains the imperfect quality of the item, which is detected through the screening process, and is sold at a discounted price in a single batch at the end of the process. To accelerate bulk purchasing, the vendor offers a trade credit period to the buyer to settle the amount. In this regard, we develop a methodology to account the opportunity cost and opportunity gain. Depending upon the screening period μ, trade credit period M, shortage beginning time t and the buyer’s scheduling period T, we consider four cases: (1) M < μ < t < T, (2) μ < M < t < T, (3) μ < t < M < T and (4) μ < t < T < M. The proposed integrated model is testified with numerical experiment and sensitivity analysis by changing the value of key parameters.
Mathematics Subject Classification: 90B05 / 90B30 / 90B50 / 90C31 / 91B06 / 91B38 / 91B42
Key words: Inventory / supply chain / screening / shortage / variable setup cost / trade credit
© EDP Sciences, ROADEF, SMAI 2018
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