The effect on inventory of cooperation in single-vendor, single-buyer systems with quality considerations

This research focuses on modelling a single-vendor, single-buyer purchasing system in which the buyer uses a (Q,r) inventory policy and the vendor determines the production lot size on a make-to-order basis. A cost based model is used to determine the optimal order quantity and reorder point as well as the safety stock levels for both the vendor and buyer. Moreover, the cost of quality is included by assuming that the vendor's inventory contains defective items. A numerical example is used to illustrate how the integrated inventory models can be applied to actual systems and the types of information that can be obtained relative to implementation.