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

Authors: Apichai Ritvirool, William G. Ferrell Jr.

Addresses: Faculty of Engineering, Department of Industrial Engineering, Naresuan University, Phitsanulok, 65000, Thailand. ' Department of Industrial Engineering, Clemson University, Box 340920, Clemson, SC 29634-0920, USA

Abstract: This research focuses on modelling a single-vendor, single-buyer purchasing system in which the buyer uses an (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.

Keywords: inventory control; integrated models; quality; cooperation; operational research; single-vendor; single-buyer.

DOI: 10.1504/IJOR.2007.012857

International Journal of Operational Research, 2007 Vol.2 No.3, pp.338 - 356

Published online: 19 Mar 2007 *

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