The Optimal Number of Distributor’s Advertisements and Distributor’s Optimal Cycle Time by Considering Defective Products, Human Rrrors During the Inspection, Two-level Credit Payment Policy, and Advertisement-Dependent Demand

Document Type : Research Paper

Authors

1 M.A. Student, Department of Logistics and Supply Chain Engineering, Faculty of Industrial Engineering, University of Science and Technology, Tehran, Iran

2 Associate Professor, Department of Logistics and Supply Chain Engineering, Faculty of Industrial Engineering, University of Science and Technology, Tehran, Iran

3 Ph.D. Student, Department of Logistics and Supply Chain Engineering, Faculty of Industrial Engineering, University of Science and Technology, Tehran, Iran

Abstract

This article has developed a three-level (single supplier-single distributor-single customer) inventory model with defective products in which the supplier delivers the distributor’s ordering quantity and the distributor inspects the finished products. In this inventory model in which order includes some imperfect products, it is assume that (a) Inspectors make mistakes during the inspection process. (b) Two-level credit payment is considered to the customers, in which customers are first divided into new and old categories. Accordingly, trade credit is assigned fully to old customers and partially to new customers. (c) New customers are also divided into well-accounted and bad accounted customers in which bad accounted customers are those who refuse to pay the price of purchased finished products after ending the credit payment period. (d) Demand is dependent on number of advertisements. In this research, five subcase problems have been investigated based on the trade credit relation of supplier and distributor and for each case, the optimal number of promotional efforts and optimal length of the order cycle have been determined. In addition, the proposed model has numerically compared with the basic model and then solved with actual case study data. The results of sensitivity analysis of this real data set showed that the effect of the percentage of imperfect products and type one inspection error have a significant impact on the total profit function. Eventually, based on these results, managerial insights and some implications for future contributions are outlined

Keywords


  • K. and M. Y. J. Salameh, “Economic production quantity model for items with imperfect quality, Int. J. of Production Economics, vol.64, pp.59-64, 2000.
  • Khan, M. Y. Jaber, and M. I. M. Wahab, “Economic order quantity model for items with imperfect quality with learning in inspection,” Int. J. Prod. Econ., vol. 124, no. 1, pp. 87–96, 2010.
  • I. M. Wahab and M. Y. Jaber, “Economic order quantity model for items with imperfect quality, different holding costs, and learning effects: A note,” Comput. Ind. Eng., vol. 58, no. 1, pp. 186–190, 2010.
  • F. Hsu and J. T. Hsu, “Economic production quantity (EPQ) models under an imperfect production process with shortages backordered,” Int. J. Syst. Sci., vol. 47, no. 4, pp. 852–867, 2016.
  • Waqas Iqbal and B. Sarkar, “A Model for Imperfect Production System with Probabilistic Rate of Imperfect Production for Deteriorating Products,” DJ J. Eng. Appl. Math., vol. 4, no. 2, pp. 1–12, 2018.
  • Tiwari, Y. Daryanto, and H. M. Wee, “Sustainable inventory management with deteriorating and imperfect quality items considering carbon emission,” J. Clean. Prod., vol. 192, pp. 281–292, 2018.
  • S. Kim and B. Sarkar, “Multi-stage cleaner production process with quality improvement and lead time dependent ordering cost,” J. Clean. Prod., vol. 144, pp. 572–590, 2017.
  • Konstantaras, S. K. Goyal, and S. Papachristos, “Economic ordering policy for an item with imperfect quality subject to the in-house inspection,” Int. J. Syst. Sci., vol. 38, no. 6, pp. 473–482, 2007.
  • Pal, S. S. Sana, and K. Chaudhuri, “Three-layer supply chain - A production-inventory model for reworkable items,” Appl. Math. Computer, vol. 219, no. 2, pp. 530–543, 2012.
  • W. Kang, M. Ullah, and B. Sarkar, “Optimum ordering policy for an imperfect single-stage manufacturing system with safety stock and planned backorder,” Int. J. Adv. Manuf. Technol., vol. 95, no. 1–4, pp. 109–120, 2018.
  • Marchi, S. Zanoni, L. E. Zavanella, and M. Y. Jaber, “Supply chain models with greenhouse gases emissions, energy usage, imperfect process under different coordination decisions,” Int. J. Prod. Econ., vol. 211, pp. 145–153, 2019.
  • H. R. Pasandideh, S. T. A. Niaki, A. H. Nobil, and L. E. Cárdenas-Barrón, “A multiproduct single machine economic production quantity model for an imperfect production system under warehouse construction cost,” Int. J. Prod. Econ., vol. 169, pp. 203–214, 2015.
  • Hu and Q. Zong, “Optimal production run time for a deteriorating production system under an extended inspection policy,” Eur. J. Oper. Res., vol. 196, no. 3, pp. 979–986, 2009.
  • C. Giri and T. Dohi, “Inspection scheduling for imperfect production processes under free repair warranty contract,” Eur. J. Oper. Res., vol. 183, no. 1, pp. 238–252, 2007.
  • Lopes, “Integrated model of quality inspection, preventive maintenance and buffer stock in an imperfect production system,” Comput. Ind. Eng., vol. 126, pp. 650–656, 2018.
  • F. Yu and Y. Chen, “An integrated inventory model for items with acceptable defective items under warranty and quality improvement investment,” Qual. Technol. Quant. Manag., vol. 15, no. 6, pp. 702–715, 2018.
  • Kazemi, S. H. Abdul-Rashid, R. A. R. Ghazilla, E. Shekarian, and S. Zanoni, “Economic order quantity models for items with imperfect quality and emission considerations,” Int. J. Syst. Sci. Oper. Logistic, vol. 5, no. 2, pp. 99–115, 2018.
  • Sarkar and S. Saren, “Product inspection policy for an imperfect production system with inspection errors and warranty cost,” Eur. J. Oper. Res., vol. 248, no. 1, pp. 263–271, 2016.
  • C. Giri and S. Sharma, “Integrated model for an imperfect production-inventory system with a generalised shipment policy, errors in quality inspection and ordering cost reduction,” Int. J. Syst. Sci. Oper. Logistic, vol. 4, no. 3, pp. 260–274, 2017.
  • Dey and B. C. Giri, “A new approach to deal with learning in inspection in an integrated vendor-buyer model with imperfect production process,” Comput. Ind. Eng., no. xxxx, pp. 1–9, 2018.
  • Sarkar, B. Kumar Sett, and S. Sarkar, “Optimal production run time and inspection errors in an imperfect production system with warranty,” J. Ind. Manag. Optim. vol. 14, no. 1, pp. 267–282, 2017.
  • Khanna, A., Kishore, A., Sarker, B., & Jaggi, C. K. Inventory and pricing decisions for imperfect quality items with inspection errors, sales returns, and partial backorders under inflation. RAIRO - Operations Research, vol. 54, pp. 287–306, 2020.
  • Tiwari S, Kazemi N, Modak NM, Cárdenas-Barrán LE, Sarkar S. The effect of human errors on an integrated stochastic supply chain model with setup cost reduction and backorder price discount. Int J Production Economics, vol. 226, pp. 107643, (2020).
  • Sarkar, P. Mandal, and S. Sarkar, “An EMQ model with price and time dependent demand under the effect of reliability and inflation,” Appl. Math. Computer, vol. 231, pp. 414–421, 2014.
  • Yadav, S. Pareek, and M. Mittal, “Supply chain models with imperfect quality items when end demand is sensitive to price and marketing expenditure,” RAIRO - Oper. Res., vol. 52, no. 3, pp. 725–742, 2018.
  • A. Rad, F. Khoshalhan, and C. H. Glock, “Optimal production and distribution policies for a two-stage supply chain with imperfect items and price- and advertisement-sensitive demand: A note,” Appl. Math. Model, vol. 57, pp. 625–632, 2018.
  • A. Taleizadeh and M. Noori-daryan, “Pricing, inventory and production policies in a supply chain of pharmacological products with rework process: a game theoretic approach,” Oper. Res., vol. 16, no. 1, pp. 89–115, 2016.
  • Monami Das Roy, “Random sales price-sensitive stochastic demand an imperfect production model with free repair warranty,” J. Adv. Manag. Res., vol. 14, no. 4, pp. 408–424, 2017.
  • Tayyab, B. Sarkar, and B. Yahya, “Imperfect Multi-Stage Lean Manufacturing System with Rework under Fuzzy Demand,” Mathematics, vol. 7, no. 1, p. 13, 2018.
  • Pal, S. S. Sana, and K. Chaudhuri, “A mathematical model on EPQ for stochastic demand in an imperfect production system,” J. Manuf. Syst., vol. 32, no. 1, pp. 260, 2013
  • A. Taleizadeh, P. Pourrezaie Khaligh, and I. Moon, “Hybrid NSGA-II for an imperfect production system considering product quality and returns under two warranty policies,” Appl. Soft Comput. J., vol. 75, pp. 333–348, 2019.
  • Y. Ouyang and C. T. Chang, “Optimal production lot with imperfect production process under permissible delay in payments and complete backlogging,” Int. J. Prod. Econ., vol. 144, no. 2, pp. 610–617, 2013.
  • T. Chang, M. C. Cheng, and P. Y. Soong, “Impacts of inspection errors and trade credits on the economic order quantity model for items with imperfect quality,” Int. J. Syst. Sci. Oper. Logistics. vol. 3, no. 1, pp. 34–48, 2016.
  • Yueli, M. Jiangtao, and Z. Hengming, “Optimal replenishment policy for items with imperfect quality and shortages under permissible delay in payments,” Proc. 30th Chinese Control Decis. Conf. CCDC 2018, pp. 1181–1186, 2018.
  • T. Teng, Optimal ordering policies for a retailer who offers distinct trade credits to its good and bad credit customers,” Intern. J. Prod. Econ., vol. 119, no. 2, pp. 415–423, 2009.
  • K. Jayaswal, I. Sangal, M. Mittal, and S. Malik, “Effects of learning on retailer ordering policy for imperfect quality items with trade credit financing,” Uncertain Supply Chain Manag., vol. 7, pp. 49–62, 2018.

A. Khanna, A. Kishore, B. Sarkar, and C. Jaggi, “Supply Chain with Customer-Based Two-Level Credit Policies under an Imperfect Quality Environment,” Mathematics, vol. 6, no. 12, pp. 299, 2018.