The value of setup cost reduction and quality improvement on the optimal production run length and inspection schedules in a deteriorating production process

This paper presents an economic production quantity model taking into consideration of 1) investment in setup cost reduction; 2) investment in quality improvement; 3) investment in both setup cost reduction and quality improvement, to determine simultaneously optimal production run length and inspection schedules in a deteriorating production process. A simple and accurate algorithm is presented to locate the optimal production run length and then to find the optimal setup cost and optimal process quality simultaneously. A numerical experiment is carried out to compare the results of: 1) number of inspection schedules; 2) optimal production run length; 3) average cost per unit time of the proposed model to an existing model without considering the setup cost reduction and quality improvement. The results show that investment in setup cost reduction will result in reduction in primarily the optimal production run length means small lot size, while the investment in quality improvement results in number of inspections undertaken to be unity during each production run. The results show that investments in setup cost reduction and process quality improvements of a production process achieve some of the characteristics of JIT system such as small lot sizes and high quality.