Integrated inventory control and inspection policies with deterministic demand

Integrated inventory control and inspection policies with deterministic demand

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Article ID: iaor20071567
Country: United Kingdom
Volume: 33
Issue: 6
Start Page Number: 1625
End Page Number: 1638
Publication Date: Jun 2006
Journal: Computers and Operations Research
Authors: , ,
Keywords: inventory
Abstract:

In this paper, we develop integrated inventory inspection models with and without replacement of nonconforming items. Inspection policies include no inspection, sampling inspection, and 100% inspection. We consider a buyer who places an order from a supplier. When a lot is received, the buyer uses some type of inspection policy. The fraction nonconforming is assumed to be a random variable following a beta distribution. Both the order quantity and the inspection policy are decision variables. In the inspection policy involving determining sampling plan parameters, constraints on the buyer and manufacturer risks are set in order to obtain a fair plan for both parties. A solution procedure for determining the operating policies for inventory and inspection consisting of order quantity, sample size, and acceptance number is proposed. Numerical examples are presented to conduct a sensitivity analysis for important model parameters and to illustrate important issues about the developed models.

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