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Optimal vendor investment for reducing defect rate in a vendor–buyer integrated system with imperfect production process

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  • Dey, O.
  • Giri, B.C.

Abstract

This paper investigates a single-vendor single-buyer integrated production-inventory model with stochastic demand and imperfect production process. It is assumed that there is an inspection activity on the part of the buyer with a fixed screening rate greater than the demand rate. The vendor invests money in order to improve the production process quality and reduce the number of defectives. The expected annual integrated total cost is derived under the n-shipment policy and an iterative procedure is suggested to determine the optimal decisions. The benefit of investment in reducing the defect rate is illustrated by way of numerical examples. It is observed that, the higher the defect rate, the more beneficial the investment. Numerical studies further explore that an increased demand requires an increased investment to optimize the total cost.

Suggested Citation

  • Dey, O. & Giri, B.C., 2014. "Optimal vendor investment for reducing defect rate in a vendor–buyer integrated system with imperfect production process," International Journal of Production Economics, Elsevier, vol. 155(C), pages 222-228.
    • Handle: RePEc:eee:proeco:v:155:y:2014:i:c:p:222-228
    DOI: 10.1016/j.ijpe.2014.02.004
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    Cited by:

    1. Tapan Kumar Datta, 2017. "Inventory system with defective products and investment opportunity for reducing defective proportion," Operational Research, Springer, vol. 17(1), pages 297-312, April.
    2. Nasr, Walid W. & Jaber, Mohamad Y., 2019. "Supplier development in a two-level lot sizing problem with non-conforming items and learning," International Journal of Production Economics, Elsevier, vol. 216(C), pages 349-363.
    3. M. Ganesh Kumar & R. Uthayakumar, 2017. "An integrated single vendor–buyer inventory model for imperfect production process with stochastic demand in controllable lead time," International Journal of System Assurance Engineering and Management, Springer;The Society for Reliability, Engineering Quality and Operations Management (SREQOM),India, and Division of Operation and Maintenance, Lulea University of Technology, Sweden, vol. 8(2), pages 1041-1054, November.
    4. Priyamvada & Prerna Gautam & Aditi Khanna, 2021. "Sustainable production strategies for deteriorating and imperfect quality items with an investment in preservation technology," International Journal of System Assurance Engineering and Management, Springer;The Society for Reliability, Engineering Quality and Operations Management (SREQOM),India, and Division of Operation and Maintenance, Lulea University of Technology, Sweden, vol. 12(5), pages 910-918, October.
    5. Oshmita Dey, 2019. "A fuzzy random integrated inventory model with imperfect production under optimal vendor investment," Operational Research, Springer, vol. 19(1), pages 101-115, March.
    6. K. F. Mary Latha & M. Ganesh Kumar & R. Uthayakumar, 2021. "Two echelon economic lot sizing problems with geometric shipment policy backorder price discount and optimal investment to reduce ordering cost," OPSEARCH, Springer;Operational Research Society of India, vol. 58(4), pages 1133-1163, December.
    7. S. Sarkar & B. C. Giri, 2020. "A vendor–buyer integrated inventory system with variable lead time and uncertain market demand," Operational Research, Springer, vol. 20(1), pages 491-515, March.
    8. Wakhid Ahmad Jauhari & I Nyoman Pujawan & Mokh Suef, 2023. "Sustainable inventory management with hybrid production system and investment to reduce defects," Annals of Operations Research, Springer, vol. 324(1), pages 543-572, May.
    9. Pasandideh, Seyed Hamid Reza & Niaki, Seyed Taghi Akhavan & Nobil, Amir Hossein & Cárdenas-Barrón, Leopoldo Eduardo, 2015. "A multiproduct single machine economic production quantity model for an imperfect production system under warehouse construction cost," International Journal of Production Economics, Elsevier, vol. 169(C), pages 203-214.

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