Optimal quality investment, replenishment cycle time, and credit period for the buyer-seller decision model

Abstract

In this paper, the author proposes the modified Banu and Mondal’s model without product warranty for obtaining the optimal quality investment, retailer’s replenishment cycle time, and customer’s trade credit period. Assume that the product quality is normally distributed with known process mean, known standard deviation, and nominal-the-best characteristic. The declining exponential reduction of process mean and standard deviation is the function of quality investment. Numerical example and sensitivity analysis of some parameters will be provided for illustration.

Subject Classification: (2010):

• 60 Probability Theory and Stochastic Processes

Keywords:

• Quality investment
• Replenishment cycle time
• Trade credit period