Analysis of optimal vendor-buyer integrated inventory policy involving defective items

The concept of integrated inventory management has recently attracted a great deal of attention, but few studies have tackled the possible relationship between order lot and quality. As a result of weak process control, deficient planned maintenance, inadequate work instructions and/or damage in transit, an arriving order lot often includes defective items. In general, the defective rate may be certain or uncertain for various causes. This study examines three integrated vendor-buyer inventory models involving defective items. First, a crisp defective rate case is considered. Then, a triangular fuzzy number is used to represent an uncertain defective rate. Finally, statistics and fuzzy techniques are combined to formulate an uncertain defective rate. An iterative algorithm is developed to obtain the optimal strategy for each model. Furthermore, numerical examples are presented to demonstrate the results of the proposed models.