Investigating imperfect process and demand effects on inspection scheduling and supply chain replenishment policy

The challenge of supply chain management (SCM) is to have a supervision in managing operations that is critical to coordinate with partners and have high quality product. Global companies are now striving to engage in production improvement and product design efficiency to provide a good support for competition in any parts of the world. Recently, the development and improved capability of production and information technology have changed the ways in which companies and manufacturers operate. With the assist of advanced production philosophy and collaborative design and manufacturing (CDM), the quality of product and manufacturing has been notably enhanced. However, a traditional single‐stage inventory model considers a case in which depletion of inventory is merely caused by a constant rare. In practice, there is an inventory loss due to deterioration and imperfect production. The purpose of this paper is to investigate the effects of stock‐ and warranty‐dependent demand, and take the relationship among imperfect, warranty policy and inspection scheduling into consideration. An integrated two‐stage production inventory deteriorating model for replenishment policy and inspection plan is developed utilizing time‐weighted inventory approach. A numerical example is presented to demonstrate the theory. The results show that fixed selling rate, the holding cost and the unit inspection cost are the critical factors in applying the deteriorating inventory model.