An Integrated Vendor-Buyer Inventory Model with Defective Items and Trade Credit under Holding Cost Reduction

10.6186/IJIMS.201806_29(2).0001

Tsu-Pang Hsieh；Ming-Wei Weng；Rung-Hung Su；Kuei-Kuei Lai

Supply chain coordination ； holding cost reduction ； defective items ； delay in payment ； precision machine industry

International Journal of Information and Management Sciences

29卷2期（2018 / 06 / 01）

145 - 169

英文

This paper develops an integrated vendor-buyer inventory model by a case study in the precision machine industry from Taiwan. The vendor offers the buyer a permissible delay period, and the buyer receives an arriving lot containing some defective items. In addition, it is assumed that holding cost is a function of capital expenditure. The dispensable assumption that the screening time is less than the permissible delay period is relaxed. The objective is to minimize the joint total expected cost per unit time and to study the effects of trade credit and an added capital expenditure on inventory decisions. A solution procedure is established to find the optimal solutions for the supply chain. Further, we use a couple of numerical examples to illustrate the proposed model and conclude the paper with suggestions for possible future researches.

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