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Lot sizing and quality investment with quality cost analyses for imperfect production and inspection processes with commercial return

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  • Yoo, Seung Ho
  • Kim, DaeSoo
  • Park, Myung-Sub

Abstract

This study examines an imperfect production and inspection system with customer return and defective disposal. We develop an optimal lot sizing model with production and inspection quality investment, incorporating all the quality costs. We find the optimal lot size, rework frequency, defective proportion, and Type I and Type II inspection error proportions which minimize the total quality cost and maximize the total profit. We further analyze the solutions for no, partial, sequential and joint investment decisions on production and/or inspection processes in terms of quality costs using numerical analyses. The result provides important managerial insights into practice.

Suggested Citation

  • Yoo, Seung Ho & Kim, DaeSoo & Park, Myung-Sub, 2012. "Lot sizing and quality investment with quality cost analyses for imperfect production and inspection processes with commercial return," International Journal of Production Economics, Elsevier, vol. 140(2), pages 922-933.
    • Handle: RePEc:eee:proeco:v:140:y:2012:i:2:p:922-933
    DOI: 10.1016/j.ijpe.2012.07.014
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    3. Wang, Huan & Wang, Daao & Fang, Zhigeng & Zeng, Xiao-Jun, 2024. "Impacts of inspection errors and warranty costs on a complex product supply chain under different development modes," International Journal of Production Economics, Elsevier, vol. 272(C).
    4. Monami Das Roy & Shib Sankar Sana, 2021. "Inter-dependent lead-time and ordering cost reduction strategy: a supply chain model with quality control, lead-time dependent backorder and price-sensitive stochastic demand," OPSEARCH, Springer;Operational Research Society of India, vol. 58(3), pages 690-710, September.
    5. Raden Achmad Chairdino Leuveano & Mohd Nizam Ab Rahman & Wan Mohd Faizal Wan Mahmood & Chairul Saleh, 2019. "Integrated Vendor–Buyer Lot-Sizing Model with Transportation and Quality Improvement Consideration under Just-in-Time Problem," Mathematics, MDPI, vol. 7(10), pages 1-25, October.
    6. Ouyang, Liang-Yuh & Chang, Chun-Tao, 2013. "Optimal production lot with imperfect production process under permissible delay in payments and complete backlogging," International Journal of Production Economics, Elsevier, vol. 144(2), pages 610-617.
    7. 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.
    8. Chen, Tsung-Hui, 2017. "Optimizing pricing, replenishment and rework decision for imperfect and deteriorating items in a manufacturer-retailer channel," International Journal of Production Economics, Elsevier, vol. 183(PB), pages 539-550.
    9. Bimal Kumar Sett & Bikash Koli Dey & Biswajit Sarkar, 2020. "Autonomated Inspection Policy for Smart Factory—An Improved Approach," Mathematics, MDPI, vol. 8(10), pages 1-19, October.
    10. Sarkar, Biswajit & Moon, Ilkyeong, 2014. "Improved quality, setup cost reduction, and variable backorder costs in an imperfect production process," International Journal of Production Economics, Elsevier, vol. 155(C), pages 204-213.
    11. Lee, Sunghee & Kim, Daeki, 2014. "An optimal policy for a single-vendor single-buyer integrated production–distribution model with both deteriorating and defective items," International Journal of Production Economics, Elsevier, vol. 147(PA), pages 161-170.
    12. Izabela Jonek-Kowalska, 2019. "Long-term Analysis of the Effects of Production Management in Coal Mining in Poland," Energies, MDPI, vol. 12(16), pages 1-13, August.

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