An Inventory-production Model for Supply Chain under Partial Backordering and Disruption

We consider a three-level distribution network involving a raw material supplier with imperfect quality, a manufacturer and several retailers. A production-inventory model accompanied by a partial backlogging approach is developed by considering random disruptions. Any batch received from the supplier is inspected by the manufacturer and if any flaw is visited, all the goods in the inspected batch are rejected. The aim is to minimize the total cost. A heuristic algorithm is presented to compute the optimal policy.