Cooperative inventory model for vendor-buyer system with unequal-sized shipment, defective items and carbon emission cost

We develop an integrated inventory model for single‐vendor single‐buyer with deterministic demand. The vendor's production process may be deteriorated during production run and results to some defective items. The defective probability is assumed to be uniformly distributed. The shipment from vendor to buyer is made in unequal size over multiple shipments. We also incorporate the carbon emission cost and investigate the environmental impact on the model. The results of the study show that adopting unequal‐sized shipment policy in the model which considering defective items will result in lower carbon emission cost and total cost compared to an equal‐sized policy. Furthermore, the increase in defective probability will lead to the increase of carbon emission cost.