We develop a model to determine an integrated vendor-buyer inventory policy for items with imperfect quality and planned backorders. The production process is imperfect and produces a certain number of defective items with a known probability density function. The vendor delivers the items to the buyer in small lots of equally sized shipments. Upon receipt of the items, the buyer will conduct a...

This paper is an extension of Hsu and Hsu (Int J Ind Eng Comput 3(5):939–948, 2012) aiming to determine the optimal order quantity of product batches that contain defective items with percentage nonconforming following a known probability density function. The orders are subject to 100 % screening process at a rate higher than the demand rate. Shortage is backordered, and defective items...

A vendor managed system with the Consignment Stock agreement is a business practice where a buyer's inventory remains the property of the vendor until its withdrawal by the final customer demand. Such an agreement has shown to be a profitable stock management approach, especially when operating in uncertain environments where delivery lead times and/or market demand vary over time. One main iss...

In the classical inventory models, the common unrealistic assumption is that all the items produced are of good quality in nature. However, in realistic environment, it can be observed that there may be some defective items in an ordered lot. These items are usually picked up during the screening process and are sold as a single lot at the end of screening process. Further, it is tacitly assume...