Supplier risk management: An economic model of P-chart considered due-date and quality risks

We present a quality risk management model for a supplier-assembler structure supply chain. To mitigate quality risks, supply chain members are coordinated by sharing their information. A good example of such supply chain is the keiretsu of Japanese automobile industries. To be able to quick respond to the assembler's feedback (e.g., quality problems) has become a key point of a supplier's competitive edge. This ability is also useful for removing bottlenecks among a supply chain. In the setting of a due-date to treat an assignable cause, because idle risk and delay risk have a trade-off relationship, find out the optimal due-date becomes a problem of great interest to the supplier. We develop a P-chart solution model to help suppliers find out the optimal due-date that minimizes the total cost. We also clarify the relations among various risks by analyzing proposed model. We find that a longer due-time should be set when either the sampling interval is longer or a high quality is demanded.