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Pricing and production decisions in multi-product single machine manufacturing system with discrete delivery and rework

Author

Listed:
  • Shima Shafiee-Gol

    (University of Tehran)

  • Mohammad Mahdi Nasiri

    (University of Tehran)

  • Ata Allah Taleizadeh

    (University of Tehran)

Abstract

The classic economic production quantity (EPQ) inventory model assumes all items produced are of perfect quality. However, in most real-life manufacturing settings, generation of defective items is unavoidable. Reworking of imperfect items reduces the overall costs. The finished products can only be delivered to customers if the whole lot is quality assured at the end of rework. In addition, in many circumstances the delivery of the products is not continuous. This paper studies pricing and production decisions in multi-product single machine manufacturing system considering discrete delivery as well as rework. We solved this problem in two situations: first, when the condition is satisfied and second, when it is not satisfied. The obtained closed-form solution is optimal when the only constraint of the problem is satisfied; otherwise, the Lagrangian relaxation method is used to determine T* and Q*. At the end, numerical example is solved to illustrate the validity of the proposed solution procedure.

Suggested Citation

  • Shima Shafiee-Gol & Mohammad Mahdi Nasiri & Ata Allah Taleizadeh, 2016. "Pricing and production decisions in multi-product single machine manufacturing system with discrete delivery and rework," OPSEARCH, Springer;Operational Research Society of India, vol. 53(4), pages 873-888, December.
    • Handle: RePEc:spr:opsear:v:53:y:2016:i:4:d:10.1007_s12597-016-0251-z
    DOI: 10.1007/s12597-016-0251-z
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    References listed on IDEAS

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    1. Chiu, Singa Wang & Pai, Fan-Yun & Wu, Wen Kuei, 2013. "Alternative approach to determine the common cycle time for a multi-item production system with discontinuous deliveries and failure in rework," Economic Modelling, Elsevier, vol. 35(C), pages 593-596.
    2. Taleizadeh, Ata Allah & Mohammadi, Babak & Cárdenas-Barrón, Leopoldo Eduardo & Samimi, Hadi, 2013. "An EOQ model for perishable product with special sale and shortage," International Journal of Production Economics, Elsevier, vol. 145(1), pages 318-338.
    3. Chiu, Yuan-Shyi Peter & Ting, Chia-Kuan, 2010. "A note on "Determining the optimal run time for EPQ model with scrap, rework, and stochastic breakdowns"," European Journal of Operational Research, Elsevier, vol. 201(2), pages 641-643, March.
    4. Chiu, Singa Wang & Wang, Shan-Ling & Chiu, Yuan-Shyi Peter, 2007. "Determining the optimal run time for EPQ model with scrap, rework, and stochastic breakdowns," European Journal of Operational Research, Elsevier, vol. 180(2), pages 664-676, July.
    5. Taleizadeh, Ata Allah & Cárdenas-Barrón, Leopoldo Eduardo & Mohammadi, Babak, 2014. "A deterministic multi product single machine EPQ model with backordering, scraped products, rework and interruption in manufacturing process," International Journal of Production Economics, Elsevier, vol. 150(C), pages 9-27.
    6. 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.
    7. Taleizadeh, Ata Allah & Noori-daryan, Mahsa & Cárdenas-Barrón, Leopoldo Eduardo, 2015. "Joint optimization of price, replenishment frequency, replenishment cycle and production rate in vendor managed inventory system with deteriorating items," International Journal of Production Economics, Elsevier, vol. 159(C), pages 285-295.
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    Cited by:

    1. Amir Hossein Nobil & Amir Hosein Afshar Sedigh & Leopoldo Eduardo Cárdenas-Barrón, 2020. "A multiproduct single machine economic production quantity (EPQ) inventory model with discrete delivery order, joint production policy and budget constraints," Annals of Operations Research, Springer, vol. 286(1), pages 265-301, March.
    2. Tang, Xiaoying & He, Yong & Salling, Melissza, 2021. "Optimal pricing and production strategies for two manufacturers with industrial symbiosis," International Journal of Production Economics, Elsevier, vol. 235(C).
    3. S. Ganesan & R. Uthayakumar, 2023. "An EPQ model for a single-machine multiproduct imperfect production system using a hybrid logarithmic barrier method," OPSEARCH, Springer;Operational Research Society of India, vol. 60(3), pages 1121-1152, September.
    4. Amir Hossein Nobil & Amir Hosein Afshar Sedigh & Behrouz Afshar-Nadjafi, 2020. "Lot-sizing problem for a defective processing system with categorized items, backordering and pricing policy," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 19(4), pages 255-265, August.

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