EPQ for an unreliable production system with endogenous reliability and product deterioration

Abstract

In this paper, we study an economic production quantity problem for a production line subject to random shift from the in-control state (with high production rate) to out-of-control state (with low production rate). Different from previous research, we model the expected shift time as a controllable variable, based on the fact that, by investment in resources, the reliability of the production line can be improved. In the mathematical model, we consider three possible scenarios: no shift, shift without demand shortage, and shift with demand shortage, which are determined by the values of actual shift time and shifted production rate. Combining the three possible scenarios, the goal is to minimize the expected total cost per unit time by finding the optimal production time, as well as the optimal expected shift time. In addition, we extend the model to deterioration products and study the influence of product deterioration to the optimal decisions. Numerical examples are presented to illustrate the optimal solutions, followed by the sensitive analysis on important parameters. Comparing the optimal solutions under no reliability investment, reliability investment can help companies save more cost. Some other managerial insights are also proposed based on the numerical tests.

“Production + procurement” outsourcing with competitive contract manufacturer's partial learning and supplier's price discrimination

“…Huang et al. (2017) study an economic production quantity problem subject to random shift when the system can invest in innovative technology to control the shift. Wang and Shin (2015) instead assume innovation and learning help enlarge market potential because of the advertising effect.…”

Editorial to the Special Issue on Optimization of Industrial Systems with Market Disruptions

“…In this special issue, Huang et al. () study an economic production quantity (EPQ) problem for a production line that is subject to random shifts from the in‐control state (with high production rate) to the out‐of‐control state (with low production rate). In the problem, the expected shift time is a controllable variable, which means that more investment in it leads to higher reliability of the production line.…”

Novel integrated scheduling of production and preventive maintenance for serial production systems with equipment degradations

“…Considering manufacturing system in an excessive environment, the degradation of the machines cannot be neglected. 14,15 During the entire life cycle, reliability and availability of the machine decreases, 16 so the preventive maintenance is apparently nonperiodic, which makes the problem complicated but practical. 17 Moreover, combined with random shocks, 18 deteriorations of machines often result in quality of products.…”