Integrated Supply Chain Cooperative Inventory Model with Payment Period Being Dependent on Purchasing Price under Defective Rate Condition

Abstract

In most commercial transactions, the buyer and vendor may usually agree to postpone payment deadline. During such delayed period, the buyer is entitled to keep the products without having to pay the sale price. However, the vendor usually hopes to receive full payment as soon as possible, especially when the transaction involves valuable items; yet, the buyer would offer a higher purchasing price in exchange of a longer postponement. Therefore, we assumed such permissible delayed period is dependent on the purchasing price. As for the manufacturing side, defective products are inevitable from time to time, and not all of those defective products can be repaired. Hence, we would like to add defective production and repair rate to our proposed model and discuss how these factors may affect profits. In addition, holding cost, ordering cost, and transportation cost will also be considered as we develop the integrated inventory model with price-dependent payment period under the possible condition of defective products. We would like to find the maximum of the joint expected total profit for our model and come up with a suitable inventory policy accordingly. In the end, we have also provided a numerical example to clearly illustrate possible solutions.

Evaluation of Chinese Cloth Suppliers using Dynamic Grey Relational Analysis

“…A high defect rate influences negatively production costs as well as might perhaps result in a process shortage. Moreover, it might increase the storage rate in manufacturing (Yang et al, 2015). All waste sources must be identified and eliminated because defectives are a form of production waste (Ohno, 1988).…”

Ordering Policies of a Deteriorating Item in an EOQ Model under Upstream Partial Order-Quantity-Dependent Trade Credit and Downstream Full Trade Credit

“…Under order-quantity-dependent trade credit, Yueli et al [10] assumed the newsvendor model with stochastic demand and shortage and concluded that higher delay periods would increase the profit. When a three-echelon supply chain is assumed, Yang et al [11] obtained the maximum joint profit of a two-level trade credit for a single product with defective production and repair rate. In order to obtain the optimal fuzzy total cost, Shabani et al [12] established a two-warehouse mathematical inventory model under trade credit contract.…”