In this paper, we develop an economic production quantity (EPQ) model under machine breakdown and two types of repair (corrective and preventive). also, study the simultaneous effect of holding safety stock and purchasing policy. In order to avoid shortages occurring as a result of the random repair time, in addition to keep safety stock, we suppose that the manufacturer could purchase some quantities from an external supplier. This paper addresses the following question: how the manufacturer determine the optimal values of safety stock, production and purchasing lot sizes, simultaneously, to minimize the expected total cost? The introduced model is then compared with the situations in which the manufacturer only keeps safety stock or just uses an external supplier, respectively. The results through the analysis show that using the simultaneous policy when the system is prone to shortages due to long repair times, have more improvement in the performance of the system rather than using the safety stock or purchasing policies, separately.
This paper discusses a production-inventory system under random machine breakdown. Holding safety stock is the common way to mitigate the effect of random machine breakdown on shortages that may occur during machine repair time. Since holding safety stock can be costly, especially for expensive products, this paper investigates an alternative strategy in which it is assumed that the production manager can purchase the same products from a supplier in order to meet the demands that may be lost due to depletion of the inventory after the machine breakdown. The supplier has known lead-time and reliability with the quality assured products. Despite holding safety stock, purchasing occurs only when the machine breakdown happens. The question is about the optimal amount of production and purchasing lot sizes to minimize the total expected costs. The optimality of the model is investigated when failure and repair time follow an exponential distribution, and a computational algorithm for finding the optimal lot sizes is presented. A comparison between the purchasing strategy and holding safety stock is performed through a sensitivity analysis regarding some effective parameters. This study shows that using the purchasing strategy when holding or production cost rises is more beneficial than holding safety stock.
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