Integrated quality strategy in production and raw material replenishment in a manufacturing-oriented supply chain

This paper deals with the coordination of production, replenishment and inspection decisions for a manufacturing-oriented supply chain with a failure-prone transformation stage, random lead time and imperfect delivered lots. Upon reception of the lot, the manufacturer executes an acceptance sampling plan with a zero non-conforming criterion. If the sample does not contain non-conforming items, the lot is accepted; otherwise, it is rejected. In this work, two strategies regarding the refused sampled lot are studied. The first one involves a return of the lot to the supplier, who commits to improving the quality of the lot, while the second assumes that the manufacturer performs a 100 % inspection and rectification operation. This work presents two main objectives. The first one is to jointly optimize, in a stochastic and dynamic context, the ordering point of raw material, the lot size of raw material, the final product inventory threshold and the severity of the sampling plan using a simulation-based optimization approach. The second one is to determine the best of the two quality control strategies. The in-depth study has shown that no strategy could be preferred in all the cases. For this reasons, we present an easy decision-making tool (indifference curves) to help the manager select the best quality control strategy when considering the entire supply chain.