An integrated inventory model for supplier and retailer with defective items

This article develops a model to determine an optimal integrated supplier–retailer inventory policy for flawed items in a just-in-time manufacturing environment. This model is assumed to deteriorate during the production process and produce a certain number of defective items. The annual integrated total cost function is derived and both the ordering quantity and the number of deliveries per order are the parameters to be decided in the inventory policy. A numerical example illustrates the effectiveness of the proposed analysis approach.