Integrated inventory model for single-vendor single-buyer with imperfect production process (original) (raw)
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Applied Mathematical Modelling, 2013
This paper presents an integrated production-inventory model where a vendor produces an item in a batch production environment and supplies it to a set of buyers. The buyer level demand is assumed to be independent normally distributed and lead time of every buyer can be reduced at an added crash cost. The buyers review their inventory using continuous review policy, and the unsatisfied demand at the buyers is completely backordered. A model is formulated to minimize the joint total expected cost of the vendor-buyers system to determine the optimal production-inventory policy. Since it is often difficult to estimate the stock-out cost in inventory systems, and so instead of having stock-out cost component in the objective function, a service level constraint (SLC) corresponding to each buyer is included in the model. A Lagrangian multiplier technique based algorithmic approach is proposed, which evaluates a very limited number of combinations of lead time of the buyers to find simultaneously the optimal lead time, order quantity and safety factor of the buyers and the number of shipments between the vendor and the buyers in a production cycle. Finally, a numerical example and effects of the key parameters are included to illustrate the results of the proposed model.
International Journal of Production Economics, 2013
Integrated single-vendor single-buyer inventory model with multiple deliveries has proved to result in less inventory cost. However, many researchers assumed that the production run is perfect and there is no production delay. In reality, production delay is prevalent due to random machine unavailability and shortages. This study considers lost sales, and two kinds of machine unavailability distributionsuniformly and exponentially distributed. A classical optimization technique is used to derive an optimal solution and a numerical example is provided to illustrate the theory. The results show that delivery frequency has significant effect on the optimal total cost, and a higher lost sales cost will result in a higher delivery frequency.
Glock [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 136, 37-44] recently presented an integrated inventory model where the lead time can be reduced by crashing the setup and transportation time, by increasing the production rate, or by decreasing the lot size. In this note, we introduce a more realistic lead time crashing cost and propose a modified integrated inventory model by adding the transportation time as a decision variable and assuming that there are two different safety stocks. Furthermore, we give some numerical examples to illustrate the advantages of the modified model.
Journal of Information and Optimization Sciences, 2019
This papers studies the optimization of an integrated SVSB (single-vendor single-buyer) production-inventory system consisted of a manufacturer and a retailer. Productivity learning effect, imperfect quality, fuzzy demand and backlogging are incorporated in the model to minimize the total cost of the retailer and the manufacturer. An algorithm is developed to solve the model to obtain the optimal order quantity of the retailer, optimal shipment number for one production cycle of the manufacturer and the optimal maximum backlogging of the retailer. Numerical examples show that the optimal shipment decreases with the increase of the learning coefficient. When the learning coefficient is small, the fluctuation of demand will have an important impact on the optimal cost. In the early phase of production, the learning effect is significant in reducing cost, but its role is limited in the latter phase.
Integrated single vendor single buyer model with stochastic demand and variable lead time
2004
In this paper, we consider the single vendor single buyer integrated production inventory problem. We relax the assumption of deterministic demand and assume that the lead time is varying lineraly with the lot size. The lead time is composed of a lot size-dependent run time and constant delay times such as moving, waiting and setup times. A solution procedure is suggested for solving the proposed model and numerical examples are used to illustrate the benefit of integration. A sensitivity analysis is also performed to explore the effect of key parameters on lot size, reorder point, and expected total cost. r 2003 Elsevier B.V. All rights reserved.
RAIRO - Operations Research, 2021
In this paper, we develop an integrated two-echelon supply chain inventory model with a single-manufacturer and multi-retailers in which each retailer’s demand is dependent on selling price of the product. The manufacturer produces a single product and dispatched the order quantities of the retailers in some equal batches. The production process is imperfect and produces imperfect quality of products with a defective percentage which is random in nature and follows binomial distribution. Inspection process is performed by the retailers to classify the defective items in each lot delivered from the manufacturer. The defective items that were found by the retailer will be returned to the manufacturer at the next delivery. Lead time is random and it follows an exponential distribution. We also assume that shortages are allowed and are completely backlogged at each retailer’s end. A closed form solution to maximize the expected average profit for both the centralized and the decentraliz...
An Integrated Vendor and Buyer Inventory Model with Quality Improvement and Setup Cost Reduction
Operations Research and Applications: An International Journal (ORAJ), 2016
This paper attempts to determine optimal production run time and joint capital investment in setup cost reduction and process quality for production system such that the total cost is minimized. We assumed that the setup cost and process quality are logarithmic function. Main focus for this paper is the setup cost reduction. The proposed model is based on the total cost for the single vendor and single buyer. Then, an algorithm procedure is developed in order to find the optimal solution and numerical example is used to demonstrate the benefits of the model. By logarithmic investment function, the optimal investment for process quality and setup cost reduction investment also are obtained. Our objective is to develop an algorithm to determine the order quantity, setup cost, process quality and number of deliveries simultaneously, so that the total cost incurred is minimum.
An integrated multi-stage supply chain inventory model with imperfect production process
International Journal of Industrial Engineering Computations, 2015
This paper deals with an integrated multi-stage supply chain inventory model with the objective of cost minimization by synchronizing the replenishment decisions for procurement, production and delivery activities. The supply chain structure examined here consists of a single manufacturer with multi-buyer where manufacturer orders a fixed quantity of raw material from outside suppliers, processes the materials and delivers the finished products in unequal shipments to each customer. In this paper, we consider an imperfect production system, which produces defective items randomly and assumes that all defective items could be reworked. A simple algorithm is developed to obtain an optimal production policy, which minimizes the expected average total cost of the integrated production-inventory system.
An integrated production–distribution model for a deteriorating inventory item
International Journal of Production Economics, 2011
We develop an integrated production-distribution model for a deteriorating item in a two-echelon supply chain. The supplier's production batch size is restricted to an integer multiple of the discrete delivery lot quantity to the buyer. Exact cost functions for the supplier, the buyer and the entire supply chain are developed. These lead to the determination of individual optimal policies, as well as the optimal policy for the overall, integrated supply chain. We outline a procedure for determining the optimal supply chain decisions with the objective of minimizing the total system cost. Our approach is illustrated through a numerical example.
International Journal of Engineering Technologies and Management Research, 2021
This article investigates a single-vendor single-buyer supply chain model where the market demand depends on time as well as selling price and product reliability. The vendor's production rate is not constant but depends on the market demand. The vendor's production process is not perfectly reliable; it may produce some percentage of defective items during a production run. The vendor takes up a lot-forlot policy for delivering the ordered quantity to the buyer who performs 100% screening after receiving each lot. The average total profit of the integrated supply chain is derived and a numerical example is taken to validate the developed model. The optimal results of the proposed model are also discussed for some particular cases. Sensitivity analysis is performed to investigate the influence of key modelparameters on the optimal results.