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Optimal inventory cycle in a two-stage supply chain incorporating imperfect items from suppliers

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  • Mehmood Khan
  • Mohamad Y. Jaber

Abstract

In this paper, a two-level supply chain situation is considered. A manufacturer/vendor is assumed to receive raw material parts from a number of suppliers for assembling a single product. The parts obtained from the supplier are not of a perfect quality. That is, each supplier may have an approximately fixed percentage of defectives in the lots supplied. An inspection process is carried out at the vendor's end to take out these imperfect parts while manufacturing the product. A different percentage of defectives from each supplier gives rise to some unused parts left with the vendor in each cycle. These parts are utilised in the next cycle. Different coordination mechanisms for controlling the supply chain inventory are studied. A cost minimisation model is given for each. A numerical example is given to compare the coordination mechanisms.

Suggested Citation

  • Mehmood Khan & Mohamad Y. Jaber, 2011. "Optimal inventory cycle in a two-stage supply chain incorporating imperfect items from suppliers," International Journal of Operational Research, Inderscience Enterprises Ltd, vol. 10(4), pages 442-457.
    • Handle: RePEc:ids:ijores:v:10:y:2011:i:4:p:442-457
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    Cited by:

    1. Noura Yassine, 2020. "A sustainable economic production model: effects of quality and emissions tax from transportation," Annals of Operations Research, Springer, vol. 290(1), pages 73-94, July.
    2. Khan, M. & Jaber, M.Y. & Guiffrida, A.L. & Zolfaghari, S., 2011. "A review of the extensions of a modified EOQ model for imperfect quality items," International Journal of Production Economics, Elsevier, vol. 132(1), pages 1-12, July.

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