Modified Ordering Policy for Items of Imperfect Quality with Allowable Proportionate Discount using Cross Selling Effects and Datamining Techniques

Abstract: Model of Economic Order Quantity (EOQ) in which cross-selling effects are taken into account and proportional discounts are allowed for products of lesser quality. Here, we introduce cross-selling impact as a means of establishing the ordering policy. To account for the benefits of upselling and cross-selling, we treat groups of frequently purchased items as discrete units for the purposes of calculating EOQ. Furthermore, the cross-selling impacts remain more pronounced when things are defective in nature. Initially, a number of data mining approaches are investigated in order to determine the best approach for establishing the necessary link among the item sets. By factoring in the cross-selling implications, we are able to have a better idea of the EOQ and move the project further. As it is anticipated that every lot contains some level of flaw, the work involves thorough lot-by-lot inspection. The faulty products eventually reached a total profit after varying discounts were applied. Finally, the results of the proposed model are shown through numerical examples.