CONSIDERATION OF AN IMPERFECT PRODUCTION PROCESS IN THE SUPPLY CHAIN OF AN INTEGRATED INVENTORY MODEL WITH POLYNOMIAL PRESENT VALUE AND DEPENDENT CRASHING COST

Many studies have failed to give consideration to time value. However, consideration of the impact of inflation and speedy change of demand, shortening lead time and cost are the most important issues in the supply chain. In a real system, due to the deteriorating production process of the vendor and damage sustained during the transportation process from the vendor to the buyer, an arrival order batch for the buyer may contain some percentage of defective product. Therefore, we consider time value and develop an improved integrated inventory model with imperfect quality items and variable lead time which assumes dependent crashing cost is polynomial. It aims at the minimum present value of integrated inventory joint expected total cost over infinite time horizon. The goal of this paper is to derive simultaneously the optimal order quantity, the length of lead time and the number of lots which are delivered from the vender to the buyer. Finally, a numerical example is given to illustrate results.