It is a common business strategy that suppliers offer credit period to motivate customers for buying more items. As a result, suppliers can increase their own profit by selling more and earning interest if customers are failed to credit the debited amount within the delay period. The model assumes this policy along with the production of defective items and the inspection policy where the order quantity and lead time are considered as decision variables. The lead time is stochastic in nature. The model is derived analytically and an algorithm is used to minimize the total cost of the system. Finally, a numerical example is given to illustrate the model.
Bibliographical noteFunding Information:
The authors are grateful to the anonymous referees for their useful comments on earlier versions of the paper. This work was financially supported by University Grants Commission (Minor Research Project, File No. 41-1433/2012(SR)), India. The first author expresses his heartfelt gratitude to his parents, wife, and son Arnesh Sarkar. The second author wishes to express his gratitude and thanks to his friend, philosopher and guide Dr. B. Sarkar and to his parents. This research comes to reality with their help and inspiration.
All Science Journal Classification (ASJC) codes
- Computational Mathematics
- Applied Mathematics