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A replenishment policy with defective products, backlog and delay
This paper develops a model to determine an optimal replenishment
policy with defective items and shortage backlogging under
conditions of permissible delay of payments. It is assumed that
100% of each lot are screened to separate good and defective items
which are classified as imperfect quality and scrap items.
Difference between unit selling price and unit purchase cost is also
included in our mathematical model and analysis. Under this
assumption, we model the retailer's inventory system as an expected
profit maximization problem to determine the retailer's optimal
inventory cycle time and optimal order quantity. Then, a theorem is
established to describe the optimal replenishment policy for the
retailer. Finally, numerical examples are given to illustrate the
theorem and obtain some managerial phenomena.