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The Learning Effect On Setup Cost Reduction For Mixture Inventory Models With Variable Lead Time

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  • JASON CHAO-HSIEN PAN

    (Department of Business Administration, Tamkang University of Science and Technology, Taipei, Taiwan)

  • MING-CHENG LO

    (Department of Business Administration, Ching Yun University, 229, Chien-Hsin Rd., Jung-Li 320, Taiwan)

Abstract

This paper investigates the impact of learning curve effect on setup cost for the continuous review inventory model involving controllable lead time with the mixture of backorder and partial lost sales. A learning curve is a well known tool which describes the relation between the performance of a task and the number of repetitions of that task. The objective of this study is to minimize the expected total annual cost by simultaneously optimizing order quantity, safety factor and lead time under different setup learning rates. There are two models considered in the paper, one with normal demand distribution and another with general demand distribution having both mean and variance known and finite. Numerical examples are presented to illustrate the procedures of the proposed solution algorithms, along with the savings on the total costs of the models with the inclusion of the learning effect on setup.

Suggested Citation

  • Jason Chao-Hsien Pan & Ming-Cheng Lo, 2008. "The Learning Effect On Setup Cost Reduction For Mixture Inventory Models With Variable Lead Time," Asia-Pacific Journal of Operational Research (APJOR), World Scientific Publishing Co. Pte. Ltd., vol. 25(04), pages 513-529.
    • Handle: RePEc:wsi:apjorx:v:25:y:2008:i:04:n:s0217595908001845
    DOI: 10.1142/S0217595908001845
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    Cited by:

    1. Tiwari, Sunil & Kazemi, Nima & Modak, Nikunja Mohan & Cárdenas-Barrón, Leopoldo Eduardo & Sarkar, Sumon, 2020. "The effect of human errors on an integrated stochastic supply chain model with setup cost reduction and backorder price discount," International Journal of Production Economics, Elsevier, vol. 226(C).
    2. Glock, Christoph H., 2012. "Lead time reduction strategies in a single-vendor–single-buyer integrated inventory model with lot size-dependent lead times and stochastic demand," International Journal of Production Economics, Elsevier, vol. 136(1), pages 37-44.
    3. Sunantha Teyarachakul & Suresh Chand & Michal Tzur, 2016. "Lot sizing with learning and forgetting in setups: Analytical results and insights," Naval Research Logistics (NRL), John Wiley & Sons, vol. 63(2), pages 93-108, March.

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