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Economic order quantity and purchasing price for items with imperfect quality when inspection shifts from buyer to supplier

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  • Rezaei, Jafar
  • Salimi, Negin
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    Abstract

    Traditional Economic Order Quantity (EOQ) models, implicitly assume that all items that are received are perfect. Although recent EOQ models for items with imperfect quality, which relax this assumption, are closer to real-world problems, they implicitly assume that suppliers do not conduct a full inspection. In this paper, we study the relationship between buyer and supplier with regard to conducting the inspection and resulting in a change the buyer’s economic order quantity and purchasing price. We model and analyze the problem under two conditions: (1) assuming there is no relationship between the buyer’s selling price, buyer’s purchasing price, and customer demand; (2) assuming there is relationship between the buyer’s selling price, buyer’s purchasing price, and customer demand. Numerical examples are provided to illustrate the models.

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    Bibliographic Info

    Article provided by Elsevier in its journal International Journal of Production Economics.

    Volume (Year): 137 (2012)
    Issue (Month): 1 ()
    Pages: 11-18

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    Handle: RePEc:eee:proeco:v:137:y:2012:i:1:p:11-18

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    Web page: http://www.elsevier.com/locate/ijpe

    Related research

    Keywords: Economic Order Quantity (EOQ); Imperfect quality; Inspection; Purchasing; Buyer-supplier relationship;

    References

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    1. Wee, H.M. & Yu, Jonas & Chen, M.C., 2007. "Optimal inventory model for items with imperfect quality and shortage backordering," Omega, Elsevier, vol. 35(1), pages 7-11, February.
    2. Kevin Hsu, Wen-Kai & Yu, Hong-Fwu, 2009. "EOQ model for imperfective items under a one-time-only discount," Omega, Elsevier, vol. 37(5), pages 1018-1026, October.
    3. Khan, M. & Jaber, M.Y. & Guiffrida, A.L. & Zolfaghari, S., 2011. "A review of the extensions of a modified EOQ model for imperfect quality items," International Journal of Production Economics, Elsevier, vol. 132(1), pages 1-12, July.
    4. Salameh, M. K. & Jaber, M. Y., 2000. "Economic production quantity model for items with imperfect quality," International Journal of Production Economics, Elsevier, vol. 64(1-3), pages 59-64, March.
    5. Huang, Chao-Kuei, 2004. "An optimal policy for a single-vendor single-buyer integrated production-inventory problem with process unreliability consideration," International Journal of Production Economics, Elsevier, vol. 91(1), pages 91-98, September.
    6. Papachristos, S. & Konstantaras, I., 2006. "Economic ordering quantity models for items with imperfect quality," International Journal of Production Economics, Elsevier, vol. 100(1), pages 148-154, March.
    7. Rezaei, Jafar & Davoodi, Mansoor, 2011. "Multi-objective models for lot-sizing with supplier selection," International Journal of Production Economics, Elsevier, vol. 130(1), pages 77-86, March.
    8. Kun-Jen Chung & Yung-Fu Huang, 2006. "Retailer’s Optimal Cycle Times in the EOQ Model with Imperfect Quality and a Permissible Credit Period," Quality & Quantity: International Journal of Methodology, Springer, vol. 40(1), pages 59-77, 02.
    9. Chang, Hung-Chi & Ho, Chia-Huei, 2010. "Exact closed-form solutions for "optimal inventory model for items with imperfect quality and shortage backordering"," Omega, Elsevier, vol. 38(3-4), pages 233-237, June.
    10. Abad, P. L., 2003. "Optimal pricing and lot-sizing under conditions of perishability, finite production and partial backordering and lost sale," European Journal of Operational Research, Elsevier, vol. 144(3), pages 677-685, February.
    11. Chen, Liang-Hsuan & Kang, Fu-Sen, 2010. "Coordination between vendor and buyer considering trade credit and items of imperfect quality," International Journal of Production Economics, Elsevier, vol. 123(1), pages 52-61, January.
    12. Maddah, Bacel & Jaber, Mohamad Y., 2008. "Economic order quantity for items with imperfect quality: Revisited," International Journal of Production Economics, Elsevier, vol. 112(2), pages 808-815, April.
    13. Chen, Liang-Hsuan & Kang, Fu-Sen, 2007. "Integrated vendor-buyer cooperative inventory models with variant permissible delay in payments," European Journal of Operational Research, Elsevier, vol. 183(2), pages 658-673, December.
    14. Goyal, Suresh Kumar & Cardenas-Barron, Leopoldo Eduardo, 2002. "Note on: Economic production quantity model for items with imperfect quality - a practical approach," International Journal of Production Economics, Elsevier, vol. 77(1), pages 85-87, May.
    15. Wang, Chih-Hsiung, 2005. "Integrated production and product inspection policy for a deteriorating production system," International Journal of Production Economics, Elsevier, vol. 95(1), pages 123-134, January.
    16. Khouja, Moutaz, 2006. "A joint optimal pricing, rebate value, and lot sizing model," European Journal of Operational Research, Elsevier, vol. 174(2), pages 706-723, October.
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    Cited by:
    1. Chang, Hung-Chi, 2013. "An economic production quantity model with consolidating shipments of imperfect quality items: A note," International Journal of Production Economics, Elsevier, vol. 144(2), pages 507-509.

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