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Optimizing replenishment policy in an EPQ-based inventory model with nonconforming items and breakdown

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  • Chiu, Singa Wang
  • Chou, Chung-Li
  • Wu, Wen-Kuei

Abstract

The optimal replenishment policy for an economic production quantity (EPQ)-based inventory model with nonconforming items and breakdown is presented. A real-life production system inevitably generates nonconforming items and has equipment breakdowns owing to process deterioration or other uncontrollable factors. This study addressed these issues in an EPQ-based system to optimize a replenishment policy that minimizes the long-run average cost for the proposed system. Whenever a breakdown occurs, the machine is assumed to immediately be under repair, and an abort/resume inventory control policy is adopted. Under this control policy production of the interrupted lot resumes immediately after the machine is fixed and restored. A mathematical model and a recursive algorithm were used to derive the optimal replenishment policy. A numerical example was used to demonstrate the practical application and better cost efficiency of the proposed policy compared to a breakdown that occurs under a no-resumption policy.

Suggested Citation

  • Chiu, Singa Wang & Chou, Chung-Li & Wu, Wen-Kuei, 2013. "Optimizing replenishment policy in an EPQ-based inventory model with nonconforming items and breakdown," Economic Modelling, Elsevier, vol. 35(C), pages 330-337.
    • Handle: RePEc:eee:ecmode:v:35:y:2013:i:c:p:330-337
    DOI: 10.1016/j.econmod.2013.07.004
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    References listed on IDEAS

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    Cited by:

    1. Chiu, Yuan-Shyi Peter & Chen, Yung-Chung & Lin, Hong-Dar & Chang, Huei-Hsin, 2014. "Combining an improved multi-delivery policy into a single-producer multi-retailer integrated inventory system with scrap in production," Economic Modelling, Elsevier, vol. 39(C), pages 163-167.
    2. Chiu, Singa Wang & Liang, Gang-Ming & Chiu, Yuan-Shyi Peter & Chiu, Tiffany, 2019. "Production planning incorporating issues of reliability and backlogging with service level constraint," Operations Research Perspectives, Elsevier, vol. 6(C).
    3. K.Y. Kung & Y.D. Huang & H.M. Wee & Y. Daryanto, 2019. "Production-Inventory System for Deteriorating Items with Machine Breakdown, Inspection, and Partial Backordering," Mathematics, MDPI, vol. 7(7), pages 1-26, July.
    4. Harun Öztürk, 2021. "Optimal production run time for an imperfect production inventory system with rework, random breakdowns and inspection costs," Operational Research, Springer, vol. 21(1), pages 167-204, March.
    5. Chiu, Yuan-Shyi Peter & Chang, Huei-Hsin, 2014. "Optimal run time for EPQ model with scrap, rework and stochastic breakdowns: A note," Economic Modelling, Elsevier, vol. 37(C), pages 143-148.
    6. Muhammad Tayyab & Biswajit Sarkar & Bernardo Nugroho Yahya, 2018. "Imperfect Multi-Stage Lean Manufacturing System with Rework under Fuzzy Demand," Mathematics, MDPI, vol. 7(1), pages 1-18, December.

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    More about this item

    Keywords

    Economic production quantity; Replenishment policy; Machine breakdown; Abort/resume policy; Optimization; Imperfect EPQ model;
    All these keywords.

    JEL classification:

    • M11 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Production Management
    • C02 - Mathematical and Quantitative Methods - - General - - - Mathematical Economics
    • 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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