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A supply chain model with vendor-managed inventory, consignment, and quality inspection errors

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  • Hesham K. Alfares
  • Ahmed M. Attia

Abstract

This paper considers the integration between quality control and production inventory control in supply chain management. Specifically, we study the effect of inspection errors on the costs incurred in a supply chain system with a single vendor and multiple buyers. In this system, the vendor enters into a vendor-managed inventory (VMI) and a consignment stock (CS) partnership with several buyers. We assume that the items made by the vendor are not in perfect quality, but they contain a given proportion of defective units. We also assume that quality inspection of these items by the buyers is subject to sampling errors. Three cases indicating to different levels of supply integration are considered: VMI–CS system, traditional system and integrated system. For each case, a mathematical model is formulated, an optimum solution is developed, and a numerical example is solved.

Suggested Citation

  • Hesham K. Alfares & Ahmed M. Attia, 2017. "A supply chain model with vendor-managed inventory, consignment, and quality inspection errors," International Journal of Production Research, Taylor & Francis Journals, vol. 55(19), pages 5706-5727, October.
    • Handle: RePEc:taf:tprsxx:v:55:y:2017:i:19:p:5706-5727
    DOI: 10.1080/00207543.2017.1330566
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    2. M. Masanta & B. C. Giri, 2022. "A manufacturing–remanufacturing supply chain model with learning and forgetting in inspection under consignment stock agreement," Operational Research, Springer, vol. 22(4), pages 4093-4117, September.
    3. Yufeng Zhuang & Ningxi Zhang & Song Wang & Yanzhu Hu, 2019. "Optimal Logistics Control of an Omnichannel Supply Chain," Sustainability, MDPI, vol. 11(21), pages 1-16, October.
    4. Javad Asadkhani & Hadi Mokhtari & Saman Tahmasebpoor, 2022. "Optimal lot-sizing under learning effect in inspection errors with different types of imperfect quality items," Operational Research, Springer, vol. 22(3), pages 2631-2665, July.
    5. Surendra Vikram Singh Padiyar & Vandana & Shiv Raj Singh & Dipti Singh & Mitali Sarkar & Bikash Koli Dey & Biswajit Sarkar, 2022. "Three-Echelon Supply Chain Management with Deteriorated Products under the Effect of Inflation," Mathematics, MDPI, vol. 11(1), pages 1-19, December.
    6. Tiwari, Sunil & Kazemi, Nima & Modak, Nikunja Mohan & Cárdenas-Barrón, Leopoldo Eduardo & Sarkar, Sumon, 2020. "The effect of human errors on an integrated stochastic supply chain model with setup cost reduction and backorder price discount," International Journal of Production Economics, Elsevier, vol. 226(C).

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