IDEAS home Printed from https://ideas.repec.org/a/inm/oropre/v50y2002i3p424-432.html
   My bibliography  Save this article

Optimal Lot Sizes with Geometric Production Yield and Rigid Demand

Author

Listed:
  • Shoshana Anily

    (Faculty of Management, Tel Aviv University, Tel Aviv, Israel)

  • Avraham Beja

    (Faculty of Management, Tel Aviv University, Tel Aviv, Israel)

  • Amit Mendel

    (Faculty of Management, Tel Aviv University, Tel Aviv, Israel)

Abstract

A job shop has to deliver a given number of custom-order items. Production is performed in “lots” that require costly setup, and output quality is stochastic. The size of each lot must be set before output quality is observed. We study production processes whose yield is distributed according to a generalized truncated geometric distribution: Production can randomly go “out of control,” in which case all subsequent output of that lot is defective. The “generalization” allows both hazard rates and marginal production costs to vary as production progresses. Our results characterize the optimal lot sizes. In particular, we show that for small demands the optimal lot size equals the outstanding demand, and for larger demands it is less than the outstanding demand, with all lot sizes being uniformly bounded. For sufficiently large demands, we identify conditions under which the optimal lots are precisely those that minimize the ratio of production cost to the expected number of good items. A tighter characterization is given for the standard case, where hazard rates and marginal costs are constant.

Suggested Citation

  • Shoshana Anily & Avraham Beja & Amit Mendel, 2002. "Optimal Lot Sizes with Geometric Production Yield and Rigid Demand," Operations Research, INFORMS, vol. 50(3), pages 424-432, June.
    • Handle: RePEc:inm:oropre:v:50:y:2002:i:3:p:424-432
    DOI: 10.1287/opre.50.3.424.7743
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1287/opre.50.3.424.7743
    Download Restriction: no
    File URL: https://libkey.io/10.1287/opre.50.3.424.7743?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Grosfeld-Nir, Abraham, 1995. "Single bottleneck systems with proportional expected yields and rigid demand," European Journal of Operational Research, Elsevier, vol. 80(2), pages 297-307, January.
    2. D. J. White, 1965. "Dynamic Programming and Systems of Uncertain Duration," Management Science, INFORMS, vol. 12(1), pages 37-67, September.
    3. 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.
    4. Candace Arai Yano & Hau L. Lee, 1995. "Lot Sizing with Random Yields: A Review," Operations Research, INFORMS, vol. 43(2), pages 311-334, April.
    5. Evan L. Porteus, 1990. "Note---The Impact of Inspection Delay on Process and Inspection Lot Sizing," Management Science, INFORMS, vol. 36(8), pages 999-1007, August.
    6. Evan L. Porteus, 1986. "Optimal Lot Sizing, Process Quality Improvement and Setup Cost Reduction," Operations Research, INFORMS, vol. 34(1), pages 137-144, February.
    7. Hau L. Lee & Meir J. Rosenblatt, 1987. "Simultaneous Determination of Production Cycle and Inspection Schedules in a Production System," Management Science, INFORMS, vol. 33(9), pages 1125-1136, September.
    8. R. E. Levitan, 1960. "The Optimum Reject Allowance Problem," Management Science, INFORMS, vol. 6(2), pages 172-186, January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Grosfeld-Nir, Abraham & Anily, Shoshana & Ben-Zvi, Tal, 2006. "Lot-sizing two-echelon assembly systems with random yields and rigid demand," European Journal of Operational Research, Elsevier, vol. 173(2), pages 600-616, September.
    2. 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.
    3. Abraham Grosfeld‐Nir & Eyal Cohen & Yigal Gerchak, 2007. "Production to order and off‐line inspection when the production process is partially observable," Naval Research Logistics (NRL), John Wiley & Sons, vol. 54(8), pages 845-858, December.
    4. Sy-Ming Guu & Chun-Yi Lin, 2018. "The multiple lot sizing problem of a serial production system with interrupted geometric yields, rigid demand and Pentico’s heuristic," Annals of Operations Research, Springer, vol. 269(1), pages 167-183, October.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Grosfeld-Nir, Abraham & Anily, Shoshana & Ben-Zvi, Tal, 2006. "Lot-sizing two-echelon assembly systems with random yields and rigid demand," European Journal of Operational Research, Elsevier, vol. 173(2), pages 600-616, September.
    2. Kazaz, Burak & Sloan, Thomas W., 2013. "The impact of process deterioration on production and maintenance policies," European Journal of Operational Research, Elsevier, vol. 227(1), pages 88-100.
    3. T W Sloan, 2004. "A periodic review production and maintenance model with random demand, deteriorating equipment, and binomial yield," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 55(6), pages 647-656, June.
    4. Wright, CM & Mehrez, A, 1998. "An Overview of Representative Research of the Relationships Between Quality and Inventory," Omega, Elsevier, vol. 26(1), pages 29-47, February.
    5. Kaijie Zhu & Rachel Q. Zhang & Fugee Tsung, 2007. "Pushing Quality Improvement Along Supply Chains," Management Science, INFORMS, vol. 53(3), pages 421-436, March.
    6. Tien-Yu Lin & Kuo-Lung Hou, 2015. "An imperfect quality economic order quantity with advanced receiving," TOP: An Official Journal of the Spanish Society of Statistics and Operations Research, Springer;Sociedad de Estadística e Investigación Operativa, vol. 23(2), pages 535-551, July.
    7. Yoo, Seung Ho & Kim, DaeSoo & Park, Myung-Sub, 2009. "Economic production quantity model with imperfect-quality items, two-way imperfect inspection and sales return," International Journal of Production Economics, Elsevier, vol. 121(1), pages 255-265, September.
    8. B C Giri & T Dohi, 2005. "Exact formulation of stochastic EMQ model for an unreliable production system," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 56(5), pages 563-575, May.
    9. Nasr, Walid W. & Maddah, Bacel & Salameh, Moueen K., 2013. "EOQ with a correlated binomial supply," International Journal of Production Economics, Elsevier, vol. 144(1), pages 248-255.
    10. Abraham Grosfeld-Nir & Yigal Gerchak, 2002. "Multistage Production to Order with Rework Capability," Management Science, INFORMS, vol. 48(5), pages 652-664, May.
    11. W. C. Tsai & Neng-Hui Shih & Chih-Hsiung Wang, 2018. "The effects of inspection delay and restoration cost on the optimal inspection and production policy," OPSEARCH, Springer;Operational Research Society of India, vol. 55(1), pages 187-195, March.
    12. Khan, Mehmood & Jaber, Mohamad Y. & Bonney, Maurice, 2011. "An economic order quantity (EOQ) for items with imperfect quality and inspection errors," International Journal of Production Economics, Elsevier, vol. 133(1), pages 113-118, September.
    13. Vickson, Raymond G. & Hassini, Elkafi, 2006. "Lot streaming for quality control in two-stage batch production," European Journal of Operational Research, Elsevier, vol. 170(3), pages 824-843, May.
    14. Freimer, Michael & Thomas, Douglas & Tyworth, John, 2006. "The value of setup cost reduction and process improvement for the economic production quantity model with defects," European Journal of Operational Research, Elsevier, vol. 173(1), pages 241-251, August.
    15. Nasr, Walid W. & Jaber, Mohamad Y., 2019. "Supplier development in a two-level lot sizing problem with non-conforming items and learning," International Journal of Production Economics, Elsevier, vol. 216(C), pages 349-363.
    16. Zare, Marjan & Esmaeili, Maryam & He, Yuanjie, 2019. "Implications of risk-sharing strategies on supply chains with multiple retailers and under random yield," International Journal of Production Economics, Elsevier, vol. 216(C), pages 413-424.
    17. 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.
    18. Abraham Grosfeld-Nir & Yigal Gerchak & Qi-Ming He, 2000. "Manufacturing to Order with Random Yield and Costly Inspection," Operations Research, INFORMS, vol. 48(5), pages 761-767, October.
    19. Guu, Sy-Ming & Zhang, Alex X., 2003. "The finite multiple lot sizing problem with interrupted geometric yield and holding costs," European Journal of Operational Research, Elsevier, vol. 145(3), pages 635-644, March.
    20. Sy-Ming Guu & Chun-Yi Lin, 2018. "The multiple lot sizing problem of a serial production system with interrupted geometric yields, rigid demand and Pentico’s heuristic," Annals of Operations Research, Springer, vol. 269(1), pages 167-183, October.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:inm:oropre:v:50:y:2002:i:3:p:424-432. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Asher (email available below). General contact details of provider: https://edirc.repec.org/data/inforea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.