A integrated inventory model with imperfect production and inspection under trade credit financing

Abstract

In this paper we develop an integrated inventory model with imperfect production and inspection process under two-level trade credit strategy. We assume both manufacturer and retailer adopt the marketing strategy of transactions on credit. Consumers' demand is affected by the length of credit period provided by retailer. The impact of imperfect production quality and inspection errors is incorporated in this paper. Mathematical models have been derived for obtaining the optimal solution so that the annual total profit is maximized. A numerical example is given to illustrate the results developed in this paper.