Supply chain model with variable lead time under credit policy

The success of the Japanese in the employment of just-in-time (JIT) production has received a great deal of attention in the past two decades. The underlying goal of JIT is to eliminate wastes, which can be achieved through various efforts such as shortening lead time and improving quality. The objective of this study is to extend the model of Huang et al. (Eur J Oper Res 202:473-478, 2010) by allowing deterministic variable lead time and quality improvement investment on an integrated inventory model. That is, this article develops an integrated inventory model which jointly determines the optimal order quantity, process quality, lead time, and the frequency of deliveries simultaneously. Furthermore, a solution procedure is suggested for solving the proposed model, and numerical examples are given to illustrate the benefit of coordination between vendor and buyer.