Optimal lot sizing with maintenance actions and imperfect production processes

Hou, Kuo-Lung; Lin, Li-Chiao; Lin, Tien-Yu

doi:10.1080/00207721.2013.879229

Cited by 8 publications

(2 citation statements)

References 31 publications

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“…A lot of research showed that good inventory management could lead to increased revenue, lower handling and holding costs, and improved cash flow. In his famous economic production quantity (EPQ) inventory model, Taft [39] assumed that production process and products were failure-free.However, in practice product quality is not perfect and usually depends on the state of the production process [11]. To reflect the reality, many researchers extend the EPQ model to consider deteriorating production processes and imperfect product quality.…”

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“…Yano and Lee [50] and Wright and Mehrez [49] conducted detailed surveys of inventory models with random yields and imperfect product quality. Recently, Hou et al [11] considered a deteriorating production process with maintenance cost incurred while in uncontrolled state. Maddah et al [22] proposed an EOQ-type model for a two-state Markovian production process with imperfect quality items.…”

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Effect of warranty and quantity discounts on a deteriorating production system with a Markovian production process and allowable shortages

Lin¹

2021

Journal of Industrial &Amp; Management Optimization

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This paper explores the retailer's optimal lot sizing and quantity backordering for a deteriorating production system with a two-state Markov production process in which quantity discounts are provided by the supplier. The products are sold with the policy of free reasonable repair warranty employing the fraction of nonconforming items in a lot size. Unlike the traditional economic production quantity (EPQ) model with warranty policy based on the elapsed time of the system in the control state follows an exponential distribution, this paper not only constructs an alternative mathematical model for EPQ model based on the fraction of nonconforming items in a lot size for an imperfect production system but also extends the topics of optimal quantity and shortage to a wider scope of academic research and further finds that some results are different from the traditional EPQ models. We seek to minimize the expected total relevant cost through optimal lot sizing and quantity backordering. We also demonstrate that the optimal lot size is bounded in a finite interval. An efficient algorithm is developed to determine the optimal solution. Moreover, a numerical example is given and sensitivity analysis is conducted to highlight management insights.

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