Abstract
It is common in the integrated targeting inventory literature to assume 100% inspection. Yet, sampling inspection is still a valid alternative in numerous situations. Inspection time has been assumed negligible in the literature of integrated inventory and sampling inspection. Neglecting inspection time is unrealistic, especially when rejected lots are sent for 100% inspection. This research work integrates process targeting, production lot-sizing and inspection. Given a scenario of a producer and distributer, the objective is to determine the optimal mean setting at the producer, the production lot size to be produced and shipped to the distributor and the reorder point at the distributor under a given sampling inspection plan. To the best of the authors’ knowledge, sampling inspection and its associated costs are rarely addressed in integrated supply chain models, and have never been addressed in integrated models with controllable production rates. Numerical illustrations using an efficient solution technique are presented to highlight the impact of various model parameters. The results indicated that inspection time has a significant impact on the total cost of the developed model, especially, when tightened inspection plans are used.
Highlights
Chain management is the centralized management of suppliers, materials, production facilities, distribution and customers
This paper presented a study on the effect of sampling inspection for a two-stage supply chain model that involves a producer and a distributer
Relaxed assumptions were made for negligible inspection time
Summary
Chain management is the centralized management of suppliers, materials, production facilities, distribution and customers. We propose an integrated process targeting, joint economic lot-sizing and inspection model. Darwish extended the single-vendor single-buyer inventory-targeting problem to consider joint determination of process mean and lot-sizing. Alkhedher and Darwish addressed the integrated inventory-targeting problem with random demand They assumed the produced items to have upper and lower specification limits and nonconforming items were scrapped. They concluded that demand variation should not be neglected in the integrated inventory-targeting problem. Darwish and Aldaihani studied the integrated inventory-targeting problem for a single-vendor multi-newsvendor supply chain. They demonstrated the importance of integration through a illustrative examples. Recent research works include: the possibility of order processing time reduction by including an investment cost to reduce order processing time from normal to a minimum duration, smart pricing and market segmentation, and addressing the case of stochastic demand.
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