A SINGLE-VENDOR SINGLE-BUYER INTEGRATED PRODUCTION-INVENTORY MODEL WITH QUALITY IMPROVEMENT AND CONTROLLABLE PRODUCTION RATE
DOI:
https://doi.org/10.11113/jt.v80.10494Keywords:
Inventory, stochastic demand, production rate, quality improvement, supply chainAbstract
In the classical vendor-buyer inventory models, the common unrealistic assumption is that all the items manufactured are in good quality. However, in reality, it can be observed that there may be some defective items produced and then delivered to the buyer. Thus, the existence of defective items would consequently give significant influence to system behavior. In addition, a manufacturing flexibility such as the capability to adjust production capacity becomes a key success factor for increasing system flexibility as well as reducing total cost. Here, we investigate how a quality improvement program and adjustable production rate can help the supply chain to reduce the total cost. This paper studies the effect of quality improvement and controllable production rate in joint economic lot size model consisting of single-vendor and single-buyer under stochastic demand. The model gives allowance to the vendor to adjust production rate and also to invest an amount of capital investment to reduce the defect rate. The lead time is comprised of production time and setup and transportation time. The model also considers a situation in which the shortages in buyer side are assumed to be partially backordered. To solve the model, an iterative algorithm is proposed to determine simultaneously safety factor, delivery lot size, delivery frequency, production rate and process quality for minimizing total cost is proposed. The result from this study shows that allowing the vendor to both adjust the production rate and reduce the defective product by adopting quality improvement policy can reduce the individual and total cost. In the example given, the proposed model gives significant total cost saving of 45.9% compared to the model without controllable production rate and quality improvement.
References
Goyal, S.K. 1976. An Integrated Inventory Model for a Single Supplier–Single Customer Problem. International Journal of Production Research. 15(1): 107-111.
Banerjee. 1986. A Joint Economic-Lot-Size Model for Purchaser and Vendor. Decision Science. 17(3): 292-311.
Goyal, S. K. 1988. A Joint-Economic-Lot-Size Model for Purchaser and Vendor: A Comment. Decision Science. 19(1): 236-241.
Goyal, S. K. 1995. A One Vendor Multi-Buyer Integrated Production Inventory Model: A Comment. European Journal of Operational Research. 81(1): 209-210.
Hill, R. M. 1997. The Single-Vendor Single-Buyer Integrated Production-Inventory Model with a Generalized Policy. European Journal of Operational Research. 97(3): 493-499.
Hill, R. M. 1999. The Optimal Production and Shipment Policy for the Single-Vendor Single-buyer Integrated Production-inventory Problem. International Journal of Production Research. 37(11): 2463-2475.
Jauhari, W. A., Pamuji, A. S., and Rosyidi, C. N. 2014. Cooperative Inventory Model for Vendor-Buyer System with Unequal-sized Shipment, Defective Items and Carbon Emission Cost. International Journal of Logistics Systems and Management. 19(2): 163-185.
Pujawan, I. N., and Kingsman, B. G. 2002. Joint Optimization and Timing Synchronization in a Buyer Supplier Inventory System. International Journal of Quantitative Management. 8(2): 93-110.
Ben-Daya, M., Darwish, M., and Ertogral, K. 2008. The Joint Economic Lot Sizing: Review and Extensions. European Journal of Operational Research. 185(2): 726-742.
Rosenblatt, M. J., and Lee, H. L. 1986. Economic Production Cycles with Imperfect Production Process. IIE Transaction. 18(1): 48-55.
Porteus, E. L. 1986. Optimal Lot Sizing, Process Quality Improvement and Setup Cost Reduction. Operations Research. 34: 137-144.
Lee, J. S., and Park, K. S. 1991. Joint Determination of Production Cycle and Inspection Intervals in a Deteriorating Production. Journal of Operational Research. 42(9): 775-783.
Ouyang, L. Y., and Chang, H. C. 2000. Impact of Investing in Quality Improvement on (Q, r, L) Model Involving the Imperfect Production Process. Production Planning Control. 11(6): 598-607.
Ouyang, L. Y., Chen, C. K., and Chang, H. C. 2002. Quality Improvement, Setup Cost and Lead-Time Reductions in Lot Size Reorder Point Models with an Imperfect Production Process. Computers and Operations Research. 29(12): 1701-1717.
Chen, C. K., Lo, C. C., and Liao, Y. X. 2008. Optimal Lot Size with Learning Consideration on an Imperfect Production System with Allowable Shortages. International Journal of Production Economics. 113(1): 459-469.
Huang, C. K. 2004. An Optimal Policy for a Single-Vendor Single-Buyer Integrated Production-Inventory Problem with Process Unreliability Consideration. International Journal of Production Economics. 91(1): 91-98.
Yang, J. S., and Pan, J. C. 2004. Just-In-Time Purchasing: An Integrated Inventory Model Involving Deterministic Variable Lead Time and Quality Improvement. International Journal of Production Research. 42(5): 853-863.
Ouyang, L. H., Wu, K. S., and Ho, C. H. 2007. An Integrated Vendor-Buyer Inventory Model with Quality Improvement and Lead Time Reduction. International Journal of Production Economics. 108(1-2): 349-358.
Khan, M., and Jaber, M. Y. 2011. Optimal Inventory Cycle in a Two-Stage Supply Chain Incorporating Imperfect Items from Suppliers. International Journal of Operational Research. 10(4): 442-457.
Uthayakumar, R., and Parvathi, P. 2011. A Two-stage Supply Chain with Order Cost Reduction and Credit Period Incentives for Deteriorating Items. The International Journal of Advanced Manufacturing Technology. 56(5-8): 799-807.
Uthayakumar, R., and Rameswari, M. 2013. Supply Chain Model with Variable Lead Time under Credit Policy. The International Journal of Advanced Manufacturing Technology. 64(1-4): 389-397.
Buzacott, J. A., and Ozrahan, I. A. 1983. One and Two-Stage Scheduling of Two Products with Distributed Inserted Idle Time: The Benefits of a Controllable Production Rate. Naval Research Logistic Quarter. 30(4): 675-696.
Schweitzer, P. J., and Seidmann, A. 1991. Optimizing Processing Rates for Flexible Manufacturing Systems. Management Science. 37: 454-466.
Khouja, M., and Mehrez, A. 1994. Economic Production Lot Size Model with Variable Production Rate and Imperfect Quality. Journal of Operational Research Society. 45(2): 1405-1417.
Moon, I. K., and Cha, B. C. 2005. A Continuous Review Inventory Model with the Controllable Production Rate of the Manufacturer. International Transaction of Operational Research. 12(1): 247-258.
Song, H., Yang, H., and Luo, J. 2010. Integrated Inventory Model with Lot Size, Production Rate, and Lead Time Interactions. International Journal of Management Science and Engineering Management. 5(2): 141-148.
Ben-Daya, M., and Hariga, M. 2004. Integrated Single Vendor Single Buyer Model with Stochastic Demand and Variable Lead Time. International Journal of Production Economics. 92(1): 75-80.
Hsiao, Y. C. 2008. A Note on Integrated Single Vendor Single Buyer Model with Stochastic Demand and Variable Lead Time. International Journal of Production Economics. 114(1): 294-297.
Glock, C. H. 2009. A Comment: Integrated Single Vendor-Single Buyer Model with Stochastic Demand and Variable Lead Time. International Journal of Production Economics. 122(2): 790-792.
Glock, C. 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. 136(1): 37-44.
Jauhari, W. A., Sejati, N. P. and Rosyidi, C. N. 2016. A Collaborative Supply Chain Inventory Model with Defective Items, Adjusted Production Rate and Variable Lead Time. International Journal of Procurement Management. 9(6): 733-750.
Jauhari, W. A., Mayangsari, S., Kurdhi, N. A. and Wong, K. Y. 2017. A Fuzzy Periodic Review Integrated Inventory Model Involving Stochastic Demand, Imperfect Production Process and Inspection Errors. Cogent Engineering. ID 1308653: 1-24.
AlDurgam, M., Adegbola, K. and Glock, C. H. In press. A Single-Vendor Single-Manufacturer Integrated Inventory Model with Stochastic Demand and Variable Production Rate. International Journal of Production Economics.
Downloads
Published
Issue
Section
License
Copyright of articles that appear in Jurnal Teknologi belongs exclusively to Penerbit Universiti Teknologi Malaysia (Penerbit UTM Press). This copyright covers the rights to reproduce the article, including reprints, electronic reproductions, or any other reproductions of similar nature.
