Non-linear programming model for cost minimisation in a supply chain, including non-quality and inspection costs

Satisfaction of customers' quality expectations is a fundamental attribute for any company willing to succeed in a competitive environment. The achievement of such expectations typically involves the implementation of costly measures like quality inspection procedures. From an economic point of view, the optimal decision about whether to implement or not this type of measures should be the result of a balance between the costs associated with their application and the potential economic losses caused by failing to satisfy customers' quality levels. In this paper, we develop a model that addresses to attain such balance. A distinguishing feature of our work is that it combines in a single model logistic and quality costs. Our model provides a set of inspection plans to be implemented for both incoming and outgoing units, as well as the values of the parameters for such inspection plans. A solution methodology is presented as well as a case study. Possible future research directions are offered.