Optimal Order Allocation and Supplier Selection with Imperfect Quality Products and Financial Constraint

The Classical Economic Order Quantity (EOQ) is a well-known inventory control technique. Two common assumptions in this technique are: (i) there is one level and (ii) the ordered items are of perfect quality. We have considered a two-level supply chain with one retailer and a set of suppliers. A model has been formulated that simultaneously determines both supplier selection and inventory allocation problems in the supply chain. The retailer orders multi product with a special selling season to a set of suppliers. The received products dependent on the suppliers contain a certain percentage of imperfect quality items and have different prices. It is assumed that the retailer has a limited capital and maximum storage space to hold the received products. On the other hand, the suppliers have a limited capacity for supply. So, the problem is modeled as a mixed integer nonlinear programming model. The retailer needs to make a decision about which products, with which quantities and to which suppliers should he order for maximizing the total profit. The clothing, fishery and fruits industries give good examples for the introduced model. Finally, two numerical examples are presented to illustrate the efficiency of the proposed model.