IDEAS home Printed from https://ideas.repec.org/a/wly/navres/v41y1994i2p257-272.html
   My bibliography  Save this article

Investment in the reduction of uncertainties in just‐in‐time purchasing systems

Author

Listed:
  • Jeong‐Wook Choi

Abstract

When the uncertainties of supply caused by lead‐time variability, natural disasters, or other reasons are not considered as given, but as manageable, a company invests to reduce these uncertainties to save a company's operating cost. This article examines economic trade‐offs of investments directed toward the reduction of uncertainties. Two models are presented. The first introduces the ability of a purchaser to reduce the variance of the lead time of its supplier. The second model adds the ability of the purchaser to not only influence the variance of its supplier's lead time, but to influence the proportion of defective units produced by the supplier. This article develops explicit solutions for jointly choosing optimal variances for both lead time and proportion of defective units within a reorder‐point model. Two cases are considered; defective rate is independent of lead time, or defective rate depends on lead time. © 1994 John Wiley & Sons, Inc.

Suggested Citation

  • Jeong‐Wook Choi, 1994. "Investment in the reduction of uncertainties in just‐in‐time purchasing systems," Naval Research Logistics (NRL), John Wiley & Sons, vol. 41(2), pages 257-272, March.
    • Handle: RePEc:wly:navres:v:41:y:1994:i:2:p:257-272
    DOI: 10.1002/1520-6750(199403)41:23.0.CO;2-7
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/1520-6750(199403)41:23.0.CO;2-7
    Download Restriction: no
    File URL: https://libkey.io/10.1002/1520-6750(199403)41:23.0.CO;2-7?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. Evan L. Porteus, 1985. "Investing in Reduced Setups in the EOQ Model," Management Science, INFORMS, vol. 31(8), pages 998-1010, August.
    Full references (including those not matched with items on IDEAS)

    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. Huang, Chao-Kuei & Tsai, Deng-Maw & Wu, Ji-Cheng & Chung, Kun-Jen, 2010. "An integrated vendor-buyer inventory model with order-processing cost reduction and permissible delay in payments," European Journal of Operational Research, Elsevier, vol. 202(2), pages 473-478, April.
    2. Hayya, Jack C. & Harrison, Terry P. & He, X. James, 2011. "The impact of stochastic lead time reduction on inventory cost under order crossover," European Journal of Operational Research, Elsevier, vol. 211(2), pages 274-281, June.
    3. Ayd{i}n Alptekinou{g}lu & Charles J. Corbett, 2008. "Mass Customization vs. Mass Production: Variety and Price Competition," Manufacturing & Service Operations Management, INFORMS, vol. 10(2), pages 204-217, August.
    4. Suárez, Freddy F. & Cusumano, Michael A., 1954- & Fine, Charles H., 1991. "Flexibility and performance : a literature critique and strategic framework," Working papers 3298-91., Massachusetts Institute of Technology (MIT), Sloan School of Management.
    5. Sarker, Bhaba R. & Coates, Eyler Robert, 1997. "Manufacturing setup cost reduction under variable lead times and finite opportunities for investment," International Journal of Production Economics, Elsevier, vol. 49(3), pages 237-247, May.
    6. Jaber, Mohamad Y. & Bonney, Maurice, 2003. "Lot sizing with learning and forgetting in set-ups and in product quality," International Journal of Production Economics, Elsevier, vol. 83(1), pages 95-111, January.
    7. S. Hemapriya & R. Uthayakumar, 2017. "An inventory model with uncertain demand and lost sales reduction under service level constraint," International Journal of System Assurance Engineering and Management, Springer;The Society for Reliability, Engineering Quality and Operations Management (SREQOM),India, and Division of Operation and Maintenance, Lulea University of Technology, Sweden, vol. 8(2), pages 1399-1418, November.
    8. Transchel, Sandra & Minner, Stefan, 2009. "The impact of dynamic pricing on the economic order decision," European Journal of Operational Research, Elsevier, vol. 198(3), pages 773-789, November.
    9. Mitali Sarkar & Li Pan & Bikash Koli Dey & Biswajit Sarkar, 2020. "Does the Autonomation Policy Really Help in a Smart Production System for Controlling Defective Production?," Mathematics, MDPI, vol. 8(7), pages 1-21, July.
    10. Kirk R. Karwan & Joseph B. Mazzola & Richard C. Morey, 1988. "Production lot sizing under setup and worker learning," Naval Research Logistics (NRL), John Wiley & Sons, vol. 35(2), pages 159-175, April.
    11. Fehmi Tanrısever & S. Sinan Erzurumlu & Nitin Joglekar, 2012. "Production, Process Investment, and the Survival of Debt‐Financed Startup Firms," Production and Operations Management, Production and Operations Management Society, vol. 21(4), pages 637-652, July.
    12. Bernstein, Fernando & Gürhan Kök, A. & Meca, Ana, 2015. "Cooperation in assembly systems: The role of knowledge sharing networks," European Journal of Operational Research, Elsevier, vol. 240(1), pages 160-171.
    13. Ananth V. Iyer & Leroy B. Schwarz & Stefanos A. Zenios, 2005. "A Principal-Agent Model for Product Specification and Production," Management Science, INFORMS, vol. 51(1), pages 106-119, January.
    14. Bintong Chen & Charles L. Munson, 2004. "Resource allocation with lumpy demand: To speed or not to speed?," Naval Research Logistics (NRL), John Wiley & Sons, vol. 51(3), pages 363-385, April.
    15. 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.
    16. Guillermo Gallego & Ilkyeong Moon, 1995. "Strategic investment to reduce setup times in the economic lot scheduling problem," Naval Research Logistics (NRL), John Wiley & Sons, vol. 42(5), pages 773-790, August.
    17. S. Priyan & R. Uthayakumar, 2017. "Setup cost reduction EMQ inventory system with probabilistic defective and rework in multiple shipments management," International Journal of System Assurance Engineering and Management, Springer;The Society for Reliability, Engineering Quality and Operations Management (SREQOM),India, and Division of Operation and Maintenance, Lulea University of Technology, Sweden, vol. 8(2), pages 223-241, June.
    18. Gong, Qiguo & Chen, Guohui & Zhang, Wen & Wang, Hui, 2022. "The role of humans in flexible smart factories," International Journal of Production Economics, Elsevier, vol. 254(C).
    19. Williams, William W. & Tang, Kwei & Gong, Linguo, 2000. "Process improvement for a container-filling process with random shifts," International Journal of Production Economics, Elsevier, vol. 66(1), pages 23-31, June.
    20. Giri, B. C. & Moon, I., 2004. "Note on an economic lot scheduling problem under budgetary and capacity constraints," International Journal of Production Economics, Elsevier, vol. 91(3), pages 229-234, October.

    More about this item

    Statistics

    Access and download statistics

    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:wly:navres:v:41:y:1994:i:2:p:257-272. 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: Wiley Content Delivery (email available below). General contact details of provider: https://doi.org/10.1002/(ISSN)1520-6750 .

    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.