Optimizing a production-inventory system under a cost target

Li, Bo; Ji, Qingkai; Arreola‐Risa, Antonio

doi:10.1016/j.cor.2020.105015

Cited by 8 publications

(6 citation statements)

References 50 publications

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“…Different aspects of optimization criteria are "cost targets" where various risk measures are considered as foundation for management decisions in production-inventory systems and as a measure of quality. Recent works in this direction are by Li et al (2020) (criterion: probability of loss and expected loss), Li and Arreola-Risa (2021) (criterion: total cost conditional value-at-risk). Bradley and Glynn (2002) investigate the interplay of the base stock level and the capacity of a single replenishment server using heavy-traffic analysis of queueing systems.…”

Section: Literature Reviewmentioning

confidence: 99%

Analysis of second order properties of production–inventory systems with lost sales

Cruz

Daduna

2022

Ann Oper Res

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We consider a single-item production–inventory system under a base stock policy for inventory control. We model the system as a closed Gordon–Newell network. The population size of the network is equal to the base stock level, which is the sum of the finished goods and work-in-process inventory. Each exogenous demand, which follows a Poisson process, releases a production order for a new unit and increases the amount of the work-in-process inventory. When there are no items in the finished goods inventory available, arriving demand is lost. The replenishment network operates with state dependent service rates, which we assume to be increasing and concave. First, we analyze the queue length behavior of a two node system and provide conditions under which the mean queue length at the production server is convex in the number of customers in the system. We prove that this leads to convexity of a standard cost function. Using Norton’s theorem, we are able to generalize our results for arbitrarily large production–inventory systems.

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Section: Literature Reviewmentioning

confidence: 99%

Analysis of second order properties of production–inventory systems with lost sales

Cruz

Daduna

2022

Ann Oper Res

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“…The total annual cost of the supplier consists of setup cost per production run, processing cost per order, save cost, and opportunity interest loss (Li et al, 2020). The average inventory of suppliers per year is as follows: Dewa, P. K., Patanduk, Y., & Jumintono / Economic Annals-XXI (2022), 198(7-8), 24-33 .…”

Section: Total Supplier Feesmentioning

confidence: 99%

An improvement of suppliermanufacture inventory system integrated with stochastic periodic review modeling for SMEs in Indonesia

Dewa¹,

Patanduk²,

Jumintono³

2022

EA-XXI

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SME LCR is one of the handicrafts SME in Yogyakarta, Indonesia. This SME produces several handicraft products such as storage baskets with various variants, and furniture. The process of ordering raw materials for SMEs is carried out when there is a demand for incoming products with the order quantity based on the raw material needs in meeting product demand. This study intends to provide recommendations for improving raw material governance to overcome demand fluctuations during the lead time and reduce the total cost of supply chain inventory by implementing an integrated inventory system. To meet the study aim, the EOQ Probabilistic P system (Period Review Method) is utilized. The P inventory model is distinguished into two models namely model P with backorder and model P with lost sales. Next, the Purchase Cost (Ob) and Procurement Costs are applied to the P model. The research method comprises through 3 stages: the pre-field stage, field stage, and the advanced stage (laboratory analysis, data analysis, and reporting). Given the results regarding banana and mendong raw materials supply, it can be observed that for banana raw materials, the reorder time interval that can generate the minimum total inventory cost for banana raw materials is 0.1470 years or 53 days with a total cost of IDR 263,721,081.72. Moreover, it is seen that the suggested model generates the minimum total cost of supply chain inventory compared to the SME policy and the individual model, which justifies the economic feasibility of this model.

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“…The Silver-Meal method was developed by Edward Silver and Harlan Meal based on the cost period [3]. Silver-Meal Algorithm is a heuristic approach to determine the purchase lot size which is relatively easy to use [5,6]. The silver meal heuristic approach is similar to the EOQ approach, but in the calculation, it is based more on the variable cost of the purchasing period and not based on the total demand during the planning horizon [7,8].…”

Section: Silver-meal Algorithmmentioning

confidence: 99%

Ordering Size Optimization of Raw Material to Minimize Inventory Costs using Wagner-Within Algorithm and Silver-Meal Methods

et al. 2021

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Inventory is one of the current assets that can be classified as company assets. But in reality, inventory often turns into an operational problem that can affect the company's overall performance. This problem occurs due to the incorrect determination of the amount of inventory. Both excess and shortage of inventory can lead to cost overruns. This study applies the Wagner Whitin Algorithm and the Silver-Meal method in the lot-sizing process and the ABC (Always Better Control) method in determining the classification of raw materials at PT. X. Using the ABC method, it is known that the ADC-12 Ingot item has a very significant effect to inventory. Inventory optimization using the Wagner Whitin Algorithm and the Silver-Meal method resulted in the optimal frequency of ordering ADC-12 Ingots is 9 times and the total inventory cost is 994,098,000 IDR as well as inventory cost savings of around 18,403,180 IDR or 1.8% of the cost of existing inventory.

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Optimizing a production-inventory system under a cost target

Cited by 8 publications

References 50 publications

Analysis of second order properties of production–inventory systems with lost sales

Analysis of second order properties of production–inventory systems with lost sales

An improvement of suppliermanufacture inventory system integrated with stochastic periodic review modeling for SMEs in Indonesia

Ordering Size Optimization of Raw Material to Minimize Inventory Costs using Wagner-Within Algorithm and Silver-Meal Methods

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