An integrated vendor-buyer cooperative inventory model for items with imperfect quality

Abstract

This article develops a model to determine an optimal integrated vendor-buyer inventory policy for flawed items in a just-in-time (JIT) manufacturing environment. The aim is to minimize the total joint annual costs incurred by the vendor and the buyer. The proposed model extends the integrated vendor-buyer inventory model by accounting for imperfect quality items. The expected annual integrated total cost function is derived and an analytic solution procedure is proposed to determine the optimal policy. Finally, numerical examples are also given to illustrate the solution procedure presented in this article.