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Joint determination of rotation cycle time and number of shipments for a multi-item EPQ model with random defective rate

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  • Chiu, Yuan-Shyi Peter
  • Huang, Chao-Chih
  • Wu, Mei-Fang
  • Chang, Huei-Hsin

Abstract

This paper addresses the joint determination of a rotation cycle time and number of shipments for a multi-item economic production quantity (EPQ) model with random defective rate. The classic EPQ model considers production planning for a single product with a perfect production process and continuous inventory issuing policy for its finished goods. However, in real vendor–buyer integrated systems, the multi-delivery policy is often used in lieu of the continuous issuing policy, and due to various uncontrollable factors, the generation of defective items is inevitable. Furthermore, in order to maximize machine utilization, management often plans the production of m products in turn on a single machine, rather than a single product on one machine, as assumed by the EPQ model. Therefore, by assuming that all defective items produced are scrap, this study aims to jointly determine the optimal rotation cycle time and number of shipments that minimize the long-run average cost for such an imperfect quality multi-item EPQ model. We employ mathematical modeling with the renewal reward theorem and obtain closed-form optimal operating policies for the proposed model. Further, we demonstrate the practical use of the results by using a numerical example and sensitivity analysis.

Suggested Citation

  • Chiu, Yuan-Shyi Peter & Huang, Chao-Chih & Wu, Mei-Fang & Chang, Huei-Hsin, 2013. "Joint determination of rotation cycle time and number of shipments for a multi-item EPQ model with random defective rate," Economic Modelling, Elsevier, vol. 35(C), pages 112-117.
    • Handle: RePEc:eee:ecmode:v:35:y:2013:i:c:p:112-117
    DOI: 10.1016/j.econmod.2013.06.024
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    References listed on IDEAS

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    More about this item

    Keywords

    Multi-item production system; Rotation cycle time; Multi-delivery; Economic production quantity model; Scrap; Vendor–buyer integrated system;
    All these keywords.

    JEL classification:

    • C02 - Mathematical and Quantitative Methods - - General - - - Mathematical Economics
    • M11 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Production Management
    • C44 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Operations Research; Statistical Decision Theory
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis

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