VENDOR-BUYER INTEGRATED PRODUCTION-INVENTORY SYSTEM FOR IMPERFECT QUALITY ITEM UNDER TRADE CREDIT FINANCE AND VARIABLE SETUP COST

摘要

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.