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Random Yield, Rework and Scrap in a Multistage Batch Manufacturing Environment

Author

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  • Anne Spence Wein

    (Digital Equipment Corporation, Tweksbury, Massachusetts)

Abstract

This study is motivated by a make-to-order marketing environment where an order is met from a single production lot size. The objective of the study is to endogenize rework and scrap decisions in a multistage production process. A Markov decision process model is developed and solved using dynamic programming techniques. The model assumes that demand is given, and material, processing and rework costs are linear in the production lot size. Modeling random yield at each stage of the production process is of key interest. The solution to the problem is characterized and the sensitivity of the solution to the parameters of the model is examined.

Suggested Citation

  • Anne Spence Wein, 1992. "Random Yield, Rework and Scrap in a Multistage Batch Manufacturing Environment," Operations Research, INFORMS, vol. 40(3), pages 551-563, June.
    • Handle: RePEc:inm:oropre:v:40:y:1992:i:3:p:551-563
    DOI: 10.1287/opre.40.3.551
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    Cited by:

    1. Tinglong Dai & Kinshuk Jerath, 2019. "Salesforce Contracting Under Uncertain Demand and Supply: Double Moral Hazard and Optimality of Smooth Contracts," Marketing Science, INFORMS, vol. 38(5), pages 852-870, September.
    2. Hadjinicola, George C. & Soteriou, Andreas C., 2003. "Reducing the cost of defects in multistage production systems: A budget allocation perspective," European Journal of Operational Research, Elsevier, vol. 145(3), pages 621-634, March.
    3. Charles M. Weber & Rainer P. Hasenauer & Nitin V. Mayande, 2018. "Toward a Pragmatic Theory for Managing Nescience," International Journal of Innovation and Technology Management (IJITM), World Scientific Publishing Co. Pte. Ltd., vol. 15(05), pages 1-26, October.
    4. M-C Wu & L-C Huang & H-M Hsu & T-S Su, 2011. "Multiple lot-sizing decisions in a two-stage production with an interrupted geometric yield and non-rigid demand," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 62(6), pages 1075-1084, June.
    5. Gerchak, Yigal & Grosfeld-Nir, Abraham, 1998. "Multiple lot-sizing, and value of probabilistic information, in production to order of an uncertain size," International Journal of Production Economics, Elsevier, vol. 56(1), pages 191-197, September.
    6. Victor F. Araman & Ioana Popescu, 2010. "Media Revenue Management with Audience Uncertainty: Balancing Upfront and Spot Market Sales," Manufacturing & Service Operations Management, INFORMS, vol. 12(2), pages 190-212, December.
    7. Jim (Junmin) Shi & Xiaohang Yue & Yao Zhao, 2014. "Operations sequencing for a multi‐stage production inventory system," Naval Research Logistics (NRL), John Wiley & Sons, vol. 61(2), pages 144-154, March.
    8. Grosfeld-Nir, Abraham & Robinson, Lawrence W., 1995. "Production to order on a two machine line with random yields and rigid demand," European Journal of Operational Research, Elsevier, vol. 80(2), pages 264-276, January.
    9. Jaber, Mohamad Y. & Khan, Mehmood, 2010. "Managing yield by lot splitting in a serial production line with learning, rework and scrap," International Journal of Production Economics, Elsevier, vol. 124(1), pages 32-39, March.
    10. G C Hadjinicola, 2010. "Manufacturing costs in serial production systems with rework," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 61(2), pages 342-351, February.
    11. Sonntag, Danja & Kiesmüller, Gudrun P., 2018. "Disposal versus rework – Inventory control in a production system with random yield," European Journal of Operational Research, Elsevier, vol. 267(1), pages 138-149.

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