Abstract
In this paper, we have developed an integrated supplier-manufacturer-retailer, joint economic lot-sizing model for the items with stochastic demand and imperfect quality. The supplier produces the item (raw material) up to certain time, which is a decision variable, and sends it to the manufacturer. Now, the manufacturer produces the item in small cycles and the production process of manufacturer is imperfect which produces certain number of defective items. A 100 % screening process for detecting the imperfect quality items is conducted, and at the end of each cycle, the imperfect items are accumulated and are reworked by the manufacturer. Thus, ultimately the retailer receives the perfect quality item. We consider that the delivery quantity to the retailer depends on the price and stock-dependent stochastic demand of the retailer. The model considers the impact of business strategies such as optimal time, optimal ordering size of raw material, production rate, etc. in different sectors on collaborating marketing system. An analytical method is applied to optimize the production time and production rate to obtain minimum total cost. Finally, numerical results, which have several interesting managerial insights and implications, and the sensitivity analysis are presented and discussed for illustrative purposes.
Highlights
Chain management has taken a very important and critical role for any company, with increasing globalization and competition in the market
The model can be used in textile industries, footwear, chemical, food, cosmetics, etc. where the defective items will be produced in each cycle of production
From the sensitivity analysis in case 1, we have found that the total cost of supplier is less sensitive, manufacturer is moderately sensitive and retailer is highly sensitive to various parameters
Summary
Chain management has taken a very important and critical role for any company, with increasing globalization and competition in the market. Numerous researchers are working on EPQ/EOQ models with imperfect quality items. This was triggered by Salameh and Jaber [38]. Kumar et al [24] worked on economic production lot size model with stochastic demand and shortage partial backlogging rate under imperfect quality items. Pal et al [32] developed an EPQ inventory model to determine the optimal buffer inventory for stochastic demand in the market during preventive maintenance or repair of a manufacturing facility with an imperfect production system. The purpose of this paper is to develop an integrated supplier-manufacturer-retailer production inventory model with imperfect product quality, price and stock-dependent stochastic demand. The amount of shipment from manufacturer to retailer depends on retailer’s demand which in turn depends on customer’s demand
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