Revisit economic ordering strategy for items with imperfect quality and backordering

Hui-Ming Teng and Ping-Hui Hsu

International Journal of Management and Enterprise Development, 2013, vol. 12, issue 3, 251-262

Abstract: Most studies assume that poor quality items are kept in stock and sold at a discounted price at the end of each period, and there will be no shortage within the screening time. This is not usually done in practice. Therefore, we revisit Maddaha and Jaber's model (2008) and apply the renewal theory to develop an economic ordering strategy by considering backorders. Pricing model for defective items is developed based on the retailer's perspective. Numerical examples are provided to demonstrate that in order to be sure there is no shortage case within the screening time, defective percentage should be restricted.

Keywords: imperfect quality; pricing models; renewal theory; defective items; shortages; economic ordering strategy; backordering; screening time; discounted prices. (search for similar items in EconPapers)
Date: 2013
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