The supplier–buyer integrated production–inventory model with random yield, scrapping, and discounting sales

This report provides four models for a single-buyer and single vendor inventory system for a single item to optimize the total cost of this supply chain system. Scrapping imperfect items at buyer’s and vendor’s locations and discounting imperfect items at buyer’s and vendor’s locations have been developed. The renewal-reward theorem has been used to calculate the expected total cost and expected replenishment cycle time. Conditions have been provided to adopt a particular model. A numerical example has been provided, sensitivity analysis has been performed to validate the theoretical results, and the input parameters affecting the total cost have been provided.