A TWO-WAREHOUSE INVENTORY MODEL FOR ITEMS WITH IMPERFECT QUALITY AND QUANTITY DISCOUNTS

Tien-Yu Lin ()
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Tien-Yu Lin: Department of Marketing and Distribution Management, Overseas Chinese University, Taichung 407, Taiwan

Asia-Pacific Journal of Operational Research (APJOR), 2011, vol. 28, issue 02, 147-161

Abstract: In this paper, a two-warehouse inventory model for items with imperfect quality and all-unit quantity discounts was developed. In practice, the supplier usually offers quantity discounts to encourage the retailer ordering larger lot sizes and thus, extra storage space is needed for the retailer. Two levels of storages, owned-warehouse and rented warehouse, are considered in this study to store bulk quantities. We develop two algorithms to determine the optimal lot size and purchasing cost: one is based on the work of Renderet al.(2003) and the other is similar to the method proposed by Goyal (1995). Two numerical examples are provided for illustration, in which we show that our algorithms require fewer iterations than that of the modified procedures based on the work of Renderet al.(2003).

Keywords: Inventory; quantity discount; imperfect quality; two-warehouse (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:wsi:apjorx:v:28:y:2011:i:02:n:s0217595911003107

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DOI: 10.1142/S0217595911003107

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