✦ LIBER ✦
Technical note: Reexamination of all-or-none inspection policies in a supply chain with endogenous product quality
✍ Scribed by Hong Wan; Xiaowei Xu
- Book ID
- 102544124
- Publisher
- John Wiley and Sons
- Year
- 2008
- Tongue
- English
- Weight
- 108 KB
- Volume
- 55
- Category
- Article
- ISSN
- 0894-069X
No coin nor oath required. For personal study only.
✦ Synopsis
Abstract
This note studies the optimal inspection policies in a supply chain in which a manufacturer purchases components from a supplier but has no direct control of component quality. The manufacturer uses an inspection policy and a damage cost sharing contract to encourage the supplier to improve the component quality. We find that all‐or‐none inspection policies are optimal for the manufacturer if the supplier's share of the damage cost is larger than a threshold; otherwise, the manufacturer should inspect a fraction of a batch. © 2008 Wiley Periodicals, Inc. Naval Research Logistics, 2008