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Effect of inspection and rework of probabilistic defective production on two-layer supply chain incorporating deterioration and reliability dependent demand

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Abstract

This paper develops a two-layer supply chain for defective and non-defective types of items produced by manufacturer and retailer. The manufacturer produces items on the condition that the faulty items will return to the manufacturer after inspecting without financial liability of the retailer. The damaged items are identified subsequent of the conducted full screening process and reworked by the retailer. Hence, the retailer sells the non-defective item to the customer. Effect of deterioration estimates to make this research a more realistic one for the manufacturer and retailer. This study discusses the impact of several business strategies such as production rate, unit production cost, idle time costs in a collaborative marketing system, reliability dependent demand, etc., to determine the optimum average profit of the integrated model. The selling price of the retailer, the purchase cost of the manufacturer, and holding cost has the potential to be a significant breakthrough. Numerical and managerial implications are demonstrated along with sensitivity analysis of different parameters for the proposed two-layer supply chain.

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Acknowledgements

We are grateful to Editors, and anonymous referees for their valuable comments and helpful suggestions, which have helped us to improve this work significantly.

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  1. Department of Mathematics, National Institute of Technology Puducherry, Karaikal, 609609, India

    Sudip Adak & G. S. Mahapatra

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  1. Sudip Adak
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  2. G. S. Mahapatra
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Correspondence to G. S. Mahapatra.

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Adak, S., Mahapatra, G.S. Effect of inspection and rework of probabilistic defective production on two-layer supply chain incorporating deterioration and reliability dependent demand. Int J Syst Assur Eng Manag 12, 565–578 (2021). https://doi.org/10.1007/s13198-021-01119-6

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